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Federal Circuit

July 23, 2015

As we have been reporting this week, the Federal Circuit handed down its decision in Amgen Inc. v. Sandoz Inc. -- a case of first impression relating to the Biologics Price Competition and Innovation Act ("BPCIA") for approval of biosimilar drug products. Unfortunately, the decision was, much like the BPCIA itself, anything but clear. Judge Newman joined Judge Lourie with regard to whether the Notice of Commercial Marketing had to occur after the FDA approved, or licensed, the biosimilar drug product -- it does. But, Judge Chen joined Judge Lourie with regard to whether the aBLA (abbreviated biologics license application) disclosure and patent exchange provisions were mandatory -- they are not. Therefore, on its face, it appeared as though Judge Newman and Judge Chen were in complete disagreement with regard to the interpretation of the BPCIA statute. However, that is not entirely accurate. Judge Newman and Judge Chen did agree on at least one thing -- that the Notice of Commercial Marketing provision makes no sense if the "shall" in the aBLA disclosure and patent exchange provisions does not mean "must," thereby making the provision optional.

42 U.S.C. § 262(l)(8)(A) provides that:

The subsection (k) applicant shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k).

Once Notice is given, § 262(l)(8)(B) provides the reference product sponsor (the original BLA holder) with the ability to seek a preliminary injunction:

After receiving the notice under subparagraph (A) and before such date of the first commercial marketing of such biological product, the reference product sponsor may seek a preliminary injunction prohibiting the subsection (k) applicant from engaging in the commercial manufacture or sale of such biological product until the court decides the issue of patent validity, enforcement, and infringement with respect to any patent that is— (i) included in the list provided by the reference product sponsor under paragraph (3)(A) or in the list provided by the subsection (k) applicant under paragraph (3)(B); and (ii) not included, as applicable, on— (I) the list of patents described in paragraph (4); or (II) the lists of patents described in paragraph (5)(B).

As can be seen, the Reference Product Sponsor cannot seek a preliminary injunction on any patent. Rather, the universe of patents available to the original BLA holder is limited by the patent exchange provisions of the BPCIA (the so-called "patent dance"). However, if the patent dance is not mandatory, as the Court so determined, then it is impossible to determine which patents are available to the Reference Product Sponsor. This was one of Judge Chen strongest arguments against the mandatory nature of this provision.

Of course, as Judge Newman pointed out, this section's nonsensical nature is due to the optional nature of the patent dance as determined by the majority. It is precisely because the Court determined that "shall" does not mean "must" with regard to the aBLA exchange provision that this section becomes a non-sequitur, according to Judge Newman. Instead, for her, the statute and the intent of Congress in creating the new biosimilar pathway require that both parties participate in the patent resolution provisions of the statute. If a biosimilar applicant is unhappy with any part of this procedure, she noted, they do not need to take advantage of the abbreviated approval process in the first place.

Tellingly, Judge Newman was the only panel member to quote and cite extensively to the legislative history of the BPCIA. If the statute was indeed "a riddle wrapped in a mystery inside an enigma," it stands to reason that consulting the Congressional record might be useful. And what did she find? "The balance established in the BPCIA requires the statutorily identified disclosures at the threshold, in order both to avert and to expedite litigation. This purpose pervades the legislative record, as interested persons debated which provisions would be mandatory, and which permissive." The "purpose" behind the BPCIA was to establish a scheme for biologics similar to Hatch Waxman for small molecule pharmaceuticals. And, in so creating this act, Congress created two schemes -- one for expedited approval of biosimilar application, and one for the efficient resolution of the patent issues. Unfortunately, these schemes are separate and distinct.

Unlike the Hatch-Waxman statute, there is nothing tying drug approval to patent-issue resolution in the BPCIA. Therefore, the FDA is free to approve or license the biosimilar application regardless of the stage of the "patent dance." This was a point stressed by Judge Chen, both at the oral hearing and in his dissent-in-part. And, unfortunately, without providing for a mechanism to prevent or delay FDA approval if a biosimilar applicant refuses to provides its aBLA, there is a question as to what remedy a BLA holder would be entitled if the section were mandatory. Of course, the Court could fashion some injunctive relief directed either at the FDA or the biosimilar applicant. But barring a consideration of this case en banc, or potential a grant of cert by the Supreme Court, the best that can be hoped for is a modification of the statute by Congress (which would appear unlikely at best).

[*]With all due respect to Bryan Ferry and Roxy Music, even we are tiring of the "dance" puns associated with the BPCIA.

July 22, 2015

In a seriously fractured decision, the Federal Circuit construed the provisions of the Biologics Price Control and Innovation Act (BPCIA) today in Amgen v. Sandoz. In doing so, the Court limited the information available to biologic drug makers regarding a competitor's application for a biosimilar product (adopting Sandoz's argument). On the other hand, the decision extended the statutory exclusivity period enjoyed by innovator biologic drug makers relating to when the biosimilar applicant can enter the marketplace (as Amgen argued). An important aspect of the Court's decision involved the meaning of the term "shall" in statutory construction. While it may have seemed to many that the plain meaning of the word is evident (see "The Tyranny of the Judiciary"), it was not so to the Court and indeed by being interpreted permissively regarding one part of the statute and stringently regarding another raised the disagreement that prevented a majority opinion on both issues.

The BPCIA is a component of the Patient Protection and Affordable Care Act (commonly known as "Obamacare") and provides for the first time an abbreviated pathway for FDA approval of so-called "biosimilar" drugs, generic versions of biologic drugs. The Act contains complicated litigation provisions that have come to be termed the "patent dance" that prescribe how the parties (termed the "reference product sponsor" and the "biosimilar applicant") decide which patents will be litigated during the time prior to FDA approval.

The case arose over Amgen's drug Neupogen® (filgrastim) that was the subject of a biosimilar application by Sandoz. At issue was Sandoz's decision not to comply with one provision of the law (42 U.S.C § 262(l)(2)(A)), which states that the biosimilar applicant "shall" provide to the reference product sponsor a copy of its application and also manufacturing information (because it was recognized that patents related to manufacturing might be at issue between the parties). Sandoz contended that despite using the word "shall," Congress did not intend to make these disclosures mandatory because the law also provided remedies for reference product sponsors faced with nondisclosure from the biosimilar applicant. The District Court sided with Sandoz in its interpretation of the law, that these remedy provisions indicate that, taken as a whole, the law does not force the biosimilar applicant to make these disclosures.

Also at issue was interpretation of another provision of the law, that the biosimilar applicant provide 180 day notice to the reference product sponsor that it intended to enter the marketplace (42 U.S.C § 262(l)(8)(A)). Sandoz provided this notice prior to obtaining FDA approval, and the District Court agreed with Sandoz that this notice was effective. Sandoz's biosimilar, under the brand name Zarxio®, obtained FDA approval on March 5, 2015 and under the District Court's interpretation of the statute Sandoz was free to enter the market (an outcome prevented by an injunction granted by the Federal Circuit pending its decision in this appeal).

The Federal Circuit opinion was written by Judge Lourie, who was able to persuade Judge Chen to his point of view regarding the interpretation of whether disclosure of the biosimilar application was mandatory, and Judge Newman to his opinion that the law prevents a biosimilar applicant from giving marketing notice until after FDA approves the application. Each of these judges wrote separate opinions reflecting partial concurrence and partial dissent (which gives both parties a basis for en banc review and, if necessary petitions for certiorari).

In the opinion, after a brief synopsis of the background of statute, its purported purpose and relationship to the Hatch-Waxman Act, and the regulatory framework for approving biologic drugs and biosimilar copies thereof, the Court addressed the facts and the parties' contentions with regard to the "patent dance" provisions of the Act (codified under 42 U.S.C § 262(l) et seq). The first of these was the dispute over whether disclosure of the biosimilar application is mandatory or optional. The opinion sets forth the relevant section of the statute (42 U.S.C § 262(l)(2)(A)):

Not later than 20 days after the Secretary notifies the subsection (k) applicant that the application has been accepted for review, the subsection (k) applicant shall provide to the reference product sponsor a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application . . . [emphasis in the opinion].

And the "remedial" provisions under (42 U.S.C § 262(l)(9)(C)):

If a subsection (k) applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor, but not the subsection (k) applicant, may bring an action under section 2201 of Title 28, for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product [emphases in the opinion].

And 35 U.S.C. § 271(e)(2)(C)(ii):

It shall be an act of infringement to submit . . . if the applicant for the application fails to provide the application and information required under section 351(l)(2)(A) of such Act, an application seeking approval of a biological product for a patent that could be identified pursuant to section 351(l)(3)(A)(i) of such Act . . . [emphasis in the opinion].

The Court recognized that "read in isolation," "shall" in 42 U.S.C § 262(l)(2)(A) appears to be mandatory: the biosimilar applicant must disclose its application and the relevant manufacturing information within 20 days of acceptance. This reading is also supported, according to the opinion by other sections of the statute that state disclosure is "required" (including 42 U.S.C. § 262(l)(1)(B)(i), (l)(9)(A), (l)(9)(C); 35 U.S.C. § 271(e)(2)(C)(ii))) and in particular section (l)(1)(B)(i):

"When" a subsection (k) applicant submits an aBLA to the FDA, "such applicant shall provide . . . confidential access to the information required to be produced pursuant to paragraph (2) and any other information that the subsection (k) applicant determines, in its sole discretion, to be appropriate" [emphases in opinion].

Ironically, the opinion also states that "under the plain language of paragraph (l)(1)(B)(i), when an applicant chooses the abbreviated pathway for regulatory approval of its biosimilar product, it is required to disclose its aBLA and manufacturing information to the RPS no later than 20 days after the FDA's notification of acceptance, but not when the "when" criterion is not met.

This "plain meaning" interpretation did not prevail, however, the opinion stating that "the 'shall' provision in paragraph (l)(2)(A) cannot be read in isolation." This is because, as Sandoz successfully argued in the District Court, the statute also contains provisions for the reference product sponsor to pursue should the biosimilar applicant fail to comply with the statute (specifically 42 U.S.C. § 262(l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii)). According to the Court, "[t]hose latter provisions indicate that 'shall' in paragraph (l)(2)(A) does not mean 'must.'" Of course, this is on its face a fairly ridiculous form of statutory construction. Using it in any statute containing penalties for non-compliance negates the requirement to comply; while it may be the case that an individual can acquiesce to suffer such penalties it cannot be said in any other context that the existence of the remedies indicates Congress did not intend its statutes to be complied with. The errancy in the Court's interpretation is reinforced in its assertion that "mandating compliance with paragraph (l)(2)(A) in all circumstances would render paragraph (l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii) superfluous" for the same reasons: penalties for non-compliance rarely indicate an intent that statutory provisions are optional, particularly when stated in the imperative.

The opinion goes on in its text and a footnote to indicate a belief that the reference product sponsor is capable of filing an infringement suit on any patent that "could be identified pursuant to [paragraph] (l)(3)(A)(i)" (emphasis in opinion), but fails to recognize that the purpose of the patent dance is to identify that patent or those patents that may be infringed. While in some instances this may be readily apparent, in others it may not, and the Court in rendering this opinion shifts the burden on identifying those patents on the reference product sponsor. This is both impractical and procedurally challenging; indeed, it sets up a situation where the biosimilar applicant can move to dismiss an infringement action based on an allegation that the complaint is insufficient because it has not identified the correct patent(s) (and this is under current pleadings rules, which may be applied more stringently against patentees should any of the current "anti-troll" legislation be enacted into law). Such a situation puts the lie to the blithe reassurance in the opinion that "[o]nce the RPS brings an infringement suit under those two provisions, it can access the required information through discovery."

The regrettable part of the decision is that the Court may be correct that the "only" provision in the statute for non-compliance is a patent infringement suit (which Amgen has brought). But by giving its imprimatur on Sandoz's clever avoidance of the clear mandate of the statute, the Court puts at risk the regime created (wisely or otherwise) by Congress. And the remedy for this error is difficult to contemplate: is Congress expected to revise that law by stating that "when we say shall we really mean it?"

The opinion then moves to the second question, regarding the timing of when the biosimilar applicant must give notice of its intent to market its biosimilar drug. This date is important because it starts a period of 180 days during which even an approved biosimilar cannot enter the marketplace. Sandoz argued (and the District Court agreed) that its notice was effective even though it was sent to Amgen prior to FDA approval of its biosimilar filgrastim drug product. The Federal Circuit disagreed (ironically, in another part of the statute containing provisions that "shall" be complied with); as set forth in 42 U.S.C. § 262(l)(8)(A):

The subsection (k) applicant shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k) [emphasis in opinion].

Here, the Court agreed with Amgen, stating that notice can only effectively be given after the biosimilar product has been approved by the FDA, stating that "the statutory language compels such an interpretation. According to the opinion, this is because while in other portions of the statute the biosimilar product is referred to as "the biological product that is the subject of the application," in subsection (l)(8)(A) the statute reads "the biological product licensed under subsection (k)." The change in language indicates to the Court that "[i]f Congress intended paragraph (l)(8)(A) to permit effective notice before the product is licensed, it would have used the 'subject of' language." The Court appreciated that Congress made this distinction at least in part because it is only after licensure that "the product, its therapeutic uses, and its manufacturing processes are fixed," something that even the biosimilar applicant does not know with certainty when it applies for FDA approval. The Court also recognized that "[g]iving notice after FDA licensure, once the scope of the approved license is known and the marketing of the proposed biosimilar product is imminent, allows the RPS to effectively determine whether, and on which patents, to seek a preliminary injunction from the court." This permits "a fully crystallized controversy" between the parties to have arisen when suit is filed, and "provides a defined statutory window during which the court and the parties can fairly assess the parties' rights prior to the launch of the biosimilar product." Interpreting the statute as advanced by Sandoz would, on the contrary, "the RPS would be left to guess the scope of the approved license and when commercial marketing would actually begin." The Court dismissed the argument that Amgen will receive an additional 180 days of exclusivity as being serendipitous under these particular circumstances (Sandoz having filed its aBLA 23 years after Amgen received market approval) which will not be the usual case.

The effects of the statutory remedies provisions on the Court's interpretation of the BPCIA is evident in its differing interpretations of mandatory statutory language in subsections (l)(2)(A) and (l)(8)(A): in the former the Court decided "shall" did not indicate an intent for the statutory language to be mandatory because there were remedial provisions available in the case on non-compliance. But the Court interpreted "shall" as used in the language of subsection (l)(8)(A) to be mandatory precisely because there were no equivalent remedial provisions in the act if, as here, notice of commercial marketing was given prematurely (or, indeed in other circumstances, not at all).

In this case the Court held that Sandoz had provided effective notice when it notified Amgen on the same day that the FDA approved its biosimilar filgrastim product. Sandoz's biosimilar, under the brand name Zarxio®, obtained FDA approval on March 5, 2015, and under this aspect of the decision will be available for marketing on September 2, 2015.

Having rendered its opinion regarding statutory interpretation, the Court affirmed the District Court's dismissal of Amgen's state law claims (based on its contention that Sandoz violated the BPCIA), vacated the District Court's summary judgment in Sandoz's favor and remanded for the patent infringement litigation to proceed. It may indicate a certain uncertainty in the Court's position (or in its confidence that Sandoz would comply) that, having decided that Sandoz did not have the right to market its biosimilar product under the notice provisions of the BPCIA until September 2, 2015, the Court nevertheless extended its injunction prohibiting Sandoz from doing just that.

Judge Newman concurred with the Court's interpretation of the statutory notice provisions but dissented on the question of whether the aBLA disclosure requirement was mandatory. In her view, Sandoz's non-compliance with these provisions was a "deliberate violation" of the BPCIA which should result in Sandoz "forfeit[ing] access to the benefits of the BPCIA" (specifically, using the aBLA pathway for rapid approval of its biosimilar filgrastim product). She finds express support for the proposition that when Congress uses the word "shall" they tend to mean it, citing Alabama v. Bozeman for the proposition that "[t]he word 'shall' is ordinarily the language of command," 533 U.S. 146, 153 (2001). She finds the Court's opinion to misapprehend the statutory regime, inter alia, because it omits remedies for non-compliance with the disclosure requirements with regard to claims to manufacturing processes, which she understands were expressly contemplated by Congress and are of particular importance to Amgen in the case at bar. She also recognizes the pleadings problems that may arise under the Court's interpretation of the statute. And she believes that the Court's opinion upsets the balance created in the statute between reference product sponsor and biosimilar applicant, and will permit the biosimilar applicant to reap the benefits of the abbreviated approval pathway under subsection (k) while avoiding the patent provisions under subsection (l). For her there is no uncertainty regarding Congressional intent and thus she dissented from this portion of the court's opinion.

Judge Chen, in his partial concurrence and partial dissent, is concerned with another aspect of the statutory regime, that of the 12-year exclusivity period. For him, the Court's opinion gives Amgen another 180 days of exclusivity that is outside the 12-year exclusivity term and thus should not be permitted (because it gives Amgen "an extra-statutory exclusivity windfall"). He would use the same "interpretation in context" approach used by the Court in interpreting subsection (l)(2)(A) for interpreting subsection (l)(8)(A) and thus find that a biosimilar applicant could give notice of intent to market prior to obtaining FDA approval of its biosimilar product. Stated in statutory construction terms, Judge Chen believes that subsection (l)(8)(A) becomes a nullity when, as here, the biosimilar applicant has not complied with subsection (l)(2)(A)'s provisions. This is because he views the provisions of subsection (l)(8)(A) to be intended to give the reference product sponsor time to obtain an injunction when the other provisions have been complied with and, as a result, the reference product sponsor has not been able to assert all its patents prior to biosimilar product launch. He states in this regard his opinion that "[t]he interwoven structure of subsection (l) indicates that Congress viewed the procedures of (l)(8) as inseverable from the preceding steps in (l)."

In a telling footnote in the majority opinion, Judge Lourie quoted Winston Churchill's famous aphorism that Russia was "a riddle wrapped in a mystery inside an enigma" to explain his appreciation of the BPCIA. He noted that in this opinion that the Court has done its "best to unravel the riddle, solve the mystery, and comprehend the enigma." While undoubtedly complicated, this view of the task of statutory construction of the BPCIA only reinforces the feeling that maybe Judge Woods was correct when she suggested that perhaps it was time to let other circuit courts "make the big mistake" in interpreting patent law.

Amgen v. Sandoz (Fed. Cir. 2015)Panel: Circuit Judges Newman, Lourie, and ChenOpinion for the court by Circuit Judge Lourie; opinion concurring in part and dissenting in part by Circuit Judge Newman; opinion dissenting in part by Circuit Judge Chen

July 21, 2015

In a seriously fractured decision, the Federal Circuit construed the provisions of the Biologics Price Control and Innovation Act (BPCIA) today in Amgen v. Sandoz. In doing so, the Court limited the information available to biologic drug makers regarding a competitor's application for a biosimilar product (adopting Sandoz's argument). On the other hand, the decision extended the statutory exclusivity period enjoyed by innovator biologic drug makers relating to when the biosimilar applicant can enter the marketplace (as Amgen argued).

The BPCIA is a component of the healthcare law commonly termed "Obamacare" and provides for the first time an abbreviated pathway for FDA approval of so-called "biosimilar" drugs, generic versions of biologic drugs. The Act contains complicated litigation provisions that have come to be termed the "patent dance" that prescribe how the parties (termed the "reference product sponsor" and the "biosimilar applicant") decide which patents will be litigated during the time prior to FDA approval.

The case arose over Amgen's drug Neupogen® (filgrastim) that was the subject of a biosimilar application by Sandoz. At issue was Sandoz's decision not to comply with the first provision of the law, which states that the biosimilar applicant "shall" provide to the reference product sponsor a copy of its application and also manufacturing information (because it was recognized that patents related to manufacturing might be at issue between the parties). Sandoz contended that despite using the word "shall" Congress did not intend to make these disclosures mandatory, because the law also provided remedies for reference product sponsors faced with nondisclosure from the biosimilar applicant. The District Court sided with Sandoz in its interpretation of the law, that these remedy provisions indicate that, taken as a whole, the law does not force the biosimilar applicant to make these disclosures.

Also at issue was interpretation of another provision of the law, that the biosmilar applicant provide 180 day notice to the reference product sponsor that it intended to enter the marketplace. Sandoz provided this notice prior to obtaining FDA approval, and the Court agreed with Amgen that the law does not permit marketing notice until after a biosimilar applicant has received FDA approval. Sandoz's biosimilar, under the brand name Zarxio®, obtained FDA approval on March 5, 2015, and under this aspect of the decision will be available for marketing on September 2nd.

The decision was written by Judge Lourie, who was able to persuade Judge Chen to his point of view regarding the interpretation of whether disclosure of the biosimilar application was mandatory, and Judge Newman to his opinion that the law prevents a biosimilar applicant from giving marketing notice until after FDA approved the application. Each of these judges wrote separate opinions reflecting partial concurrence and partial dissent, which gives both parties a basis for en banc review and, if necessary petitions for certiorari.

Patent Docs will provide more information on this decision in subsequent posts.

July 20, 2015

Earlier this month, in Daiichi Sankyo Co. v. Lee, the Federal Circuit affirmed the decision by the District Court for the District of Columbia granting summary judgment to the Director of the U.S. Patent and Trademark Office with respect to Daiichi's challenges to patent term adjustment (PTA) determinations made by the Office for two of its patents. In particular, the Court determined that the Office's denial of Daiichi's requests for reconsideration was not based on an erroneous view of the law or was otherwise arbitrary or capricious; that Daiichi was not entitled to relief on the basis that 35 U.S.C. § 154(b)(4)(A) only covers A Delay; and that Daiichi was not entitled to equitable tolling of the 180-day judicial review period under the statute.

At issue in the appeal were procedures for requesting patent term adjustments that were implemented by the Office following the Federal Circuit's decision in Wyeth v. Kappos. In particular, the Office adopted an Interim Procedure, by which a patentee could request reconsideration within two months of the patent issuance date, and which also included an Optional Interim Procedure for patents that issued before March 2, 2010. Under the Optional Interim Procedure, patentees could file a petition for reconsideration up to 180 days after a patent's issue date, provided that the sole basis for the request was that the patent term adjustment was made under the Office's pre-Wyeth adjustment calculation method. As a result, the Optional Interim Procedure was available only for patents that issued between August 5, 2009 and March 1, 2010, and petitions filed for patents that issued prior to August 5, 2009 were dismissed by the Office as untimely.

The two Daiichi patents involved in the appeal (U.S. Patent Nos. 7,342,014 and 7,365,205) issued before August 5, 2009 and therefore did not qualify for the Optional Interim Procedure. Daiichi contended that the term of each patent was shortened by at least 321 days under the pre-Wyeth calculation method. Following the Wyeth decision, Daiichi requested reconsideration of the PTA determinations for both patents. Because Daiichi's requests were filed more than two months after the patents had issued, and fell outside the two-month window specified in 37 C.F.R. § 1.705(d), the Office dismissed Daiichi's requests.

After the Office denied Daiichi's request for reconsideration of the dismissals, Daiichi filed suit against the Director seeking judicial review of the PTA determinations for both patents. Daiichi alleged that the Office violated the Administrative Procedure Act and 37 C.F.R. § 154(b) by miscalculating the patent terms for its two patents and refusing to reconsider its patent term adjustments in light of Wyeth. On summary judgment, Daiichi argued that (1) the 180-day period for seeking judicial review under 35 U.S.C. § 154(b)(4)(A) did not apply to challenges to final patent term adjustment determinations (i.e., those involving B Delay, which could not be calculated at the time a notice of allowance was mailed under the reconsideration procedures in place prior to enactment of the Leahy-Smith America Invents Act Technical Corrections Act); (2) even if the 180-day period applied, it should be equitably tolled because Daiichi relied on the Office's notice disclosing how it would calculate A and B Delay, and because Daiichi acted promptly to seek administrative and judicial review following the Wyeth decision; and (3) the Office's denial of its requests contravened the APA because 35 U.S.C. § 254 allows the Office to correct mistakes in a patent whenever they occur. The District Court rejected each of Daiichi's arguments, finding that the plain meaning of the statute made clear that § 154(b)(4)(A) covered final determinations; Daiichi could have brought a lawsuit making the same arguments that Wyeth did within the 180-day period; and Daiichi was not entitled to relief under the APA because the Office's refusal to suspend the 180-day filing period for the two Daiichi patents was not arbitrary, capricious, and not in accordance with law.

In affirming the District Court's grant of summary judgment to the Office, the Federal Circuit determined that the Office acted within its discretion in denying Daiichi's requests for reconsideration of the patent term adjustment determinations. In particular the Court stated that:

The PTO's decisions are consistent with the law in effect at the time of the decisions, including all of § 154's provisions. The PTO's conclusion that its authority to conduct administrative reviews extends no further than the period for judicial review [i.e., 180 days] is also consistent with the statute, which expressly authorizes the PTO to make regulations governing the procedures of patent term adjustment reconsiderations. 35 U.S.C. § 154(b)(3)(A).

With respect to Daiichi's argument that the Office's disparate treatment of patents issued on August 5, 2009 and patents that issued one day earlier was arbitrary and capricious, the Court concluded that:

Daiichi has not shown that the PTO treated any requests for reconsideration of patent term adjustments filed for patents issuing before August 5, 2009 differently than Daiichi's petitions. All other similar requests were denied by the agency, showing that the PTO acted consistently with respect to similarly situated patentees. Accordingly, the PTO did not act arbitrarily or capriciously based on its treatment of reconsideration requests submitted by similarly situated patentees.

The Court also determined that the Office's decision to grant extensions of the administrative review period for some patents to match the judicial review period for all patents (under the Optional Interim Procedure) was not arbitrary and capricious. In particular, the Court noted that:

Our decision in Wyeth did not obligate the PTO to create the Optional Interim Procedure. Indeed, all patentees who could take advantage of the Optional Interim Procedure could still challenge their patent term adjustment in the district court under the statute. The PTO simply provided an alternative, and more cost-effective, mechanism at the agency for attaining the same result. Choosing an administrative filing deadline that mirrors the judicial filing deadline, especially when it lengthens that deadline for some patentees, is neither arbitrary nor capricious.

Finding that the Office's denial of Daiichi's requests for reconsideration was not based on an erroneous view of the law or was otherwise arbitrary or capricious, that Daiichi was not entitled to relief on the basis that § 154(b)(4)(A) only covers A Delay, and that Daiichi was not entitled to equitable tolling of the 180-day judicial review period, the Federal Circuit affirmed.

July 16, 2015

As we reported earlier, the Federal Circuit recently affirmed the PTAB's Final Written Decision in the Versata Development Group v. SAP America, Inc. case -- the first appeal under the covered business method ("CBM") patent review procedure. In so doing, the Court made several ancillary determinations, such as whether the PTAB properly concluded that the patent-at-issue was a "CBM" patent, and if so, whether it was a technological invention (which would have excluded it from review). Judge Hughes agreed with the majority that the '350 patent claims in that case were invalid under 35 U.S.C. § 101, so he agreed that the Court should have affirmed the Board's ultimate decision. However, Judge Hughes believed that the AIA took away the Court's jurisdiction to review any aspect of the decision to institute, including the determination whether the patent falls within the scope of CBM patent review. Moreover, he found the majority's attempts to distinguish the case from In re Cuozzo to be unpersuasive. Nevertheless, Judge Hughes' dissent highlights a division that now exists at the Federal Circuit regarding PTAB post-grant-review-proceeding appeals that do not directly address the merits of the Final Written Decision. Patent Owners would be well-advised to frame such appeals as a question of the Board's "ultimate authority to invalidate," rather than a question of the Board's authority to institute.

In explaining his position, Judge Hughes logically started with the wording of the statute. 35 U.S.C. § 324(e) states: "The determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable." As such, he explained, there is an unambiguous bar to judicial review at any time. This is supported by 35 U.S.C. § 329, which provides that: "A party dissatisfied with the final written decision of the [Board] under section 328(a) may appeal the decision [to the Federal Circuit.]" (emphasis added). This position is also supported by the structure for the PTAB patent trials established by the AIA, by which the decision to institute is considered to be final, and therefore is not revisited during the merits phase of review (the trial). Finally, Judge Hughes noted that his interpretation is also supported by the purpose behind these post-grant review proceedings. Congress intended them to be a quick and cost-effective alternative to district court litigation, but if the Federal Circuit was able to second guess every decision to institute, especially after the parties and the Board had expended significant resources to reach the Final Written Decision, this goal would be frustrated.

The majority, however, would not have necessarily disagreed with this analysis by Judge Hughes. Instead, the majority made a distinction between the decision to institute and the Board's "invalidation authority under § 18" (which would fall outside the scope of § 324(e)). In other words, the majority essentially said (at least according to Judge Hughes) that if a patent is not properly subject to CBM review, that patent should not have been ultimately invalidated, and because of that we can review that issue. Of course, the dissent points out that this would eviscerate § 324(e), because properly viewed, every institution decision would look this way.

The crux of the distinction would appear to be found in the Cuozzo decision itself. Even though Judge Hughes believes that this prior case controls here, the majority pointed to an important distinction found in that decision. In Cuozzo, the Board instituted a ground of obviousness that was not present in the filed petition. All of the invalidating art was present in the petition, but the Board crafted its own obviousness rejection based on its selection of this art. The Federal Circuit noted that they could not review this institution, in part, because the alleged defect was cured. In other words, the petitioner could have drafted a proper obviousness ground. In the present case, if the patent was not subject to CBM review, the defect could not be cured -- or put another way, it would not have been possible for the petitioner to have crafted a valid ground of rejection. Even though Judge Hughes did not agree with this reading of the Cuozzo decision, he did highlight the fact that this is now a valid mechanism to challenge an issue that might otherwise be framed as one related to institution. Instead, a patent owner wishing to appeal such an issue related to the decision to institute would be wise to frame that question as one of the Board's ultimate authority to invalidate if they wish to have any success at the Federal Circuit. Of course, unfortunately, that advice does not run both ways. If a petitioner wishes to appeal a Final Written Decision upholding the validity of a patent, or some of its claims, the petitioner will most likely not want to argue that the trial should not have been instituted in the first place.

July 15, 2015

Section 18 of the Leahy-Smith America Invents Act (AIA) established a transitional program through which the USPTO conducts post-grant reviews of covered business method (CBM) patents. For the most part, § 18 incorporates the procedural aspects of 35 U.S.C. §§ 321–329, which codifies post grant reviews. The CBM review process is an attempt by Congress to address perceived litigation abuses involving business method patents.

In April 2007, Versata sued SAP for infringement of U.S. Patent No. 6,553,350 in the District Court for the Eastern District of Texas. Versata prevailed at trial. SAP appealed to the Federal Circuit, which affirmed the verdict. In September 2012, during these proceedings, SAP petitioned the USPTO's Patent Trial and Appeal Board (PTAB) for a CBM review of the '350 patent. SAP challenged the patent's validity under 35 U.S.C. §§ 101, 102, and 112. In June 2013, the PTAB ruled, finding claims 17 and 26-29 invalid under § 101.

Versata appealed this decision to the Federal Circuit, raising both procedural and substantive issues with respect to the PTAB's handling of the case. In a lengthy opinion by Judge Plager, the Court affirmed the PTAB's decision. Judge Newman joined the opinion, while Judge Hughes concurred in part and dissented in part. The majority opinion will be discussed herein.

Claim 17 of the '350 patent recites (formatted for readability):

A method for determining a price of a product offered to a purchasing organization comprising: arranging a hierarchy of organizational groups comprising a plurality of branches such that an organizational group below a higher organizational group in each of the branches is a subset of the higher organizational group; arranging a hierarchy of product groups comprising a plurality of branches such that a product group below a higher product group in each of the branches in a subset of the higher product group; storing pricing information in a data source, wherein the pricing information is associated with (i) a pricing type, (ii) the organizational groups, and (iii) the product groups; retrieving applicable pricing information corresponding to the product, the purchasing organization, each product group above the product group in each branch of the hierarchy of product groups in which the product is a member, and each organizational group above the purchasing organization in each branch of the hierarchy of organizational groups in which the purchasing organization is a member; sorting the pricing information according to the pricing types, the product, the purchasing organization, the hierarchy of product groups, and the hierarchy of organizational groups; eliminating any of the pricing information that is less restrictive; and determining the product price using the sorted pricing information.

Put in simpler terms, the '350 patent is directed to creating hierarchies of customer groups and product groups, then assigning prices to products based on these hierarchies. For instance, "[s]pecial pricing adjustments may be defined as applying to all members of a specific customer group or a specific product group." According to the patent, the prior art required a very large table to provide this function. By consolidating the information in the table into the claimed hierarchy, the invention overcomes "the prior art's difficulty in storing, maintaining, and retrieving the large amounts of data required to apply pricing adjustments to determine prices for various products."

On appeal, Versata raised the following issues:

• if the PTAB makes an initial determination under §18 of the AIA that the patented invention qualifies for "covered business method" treatment under §18, may a court review that issue when reviewing as part of a final written decision the invalidation of claims under the authority of §18?• if the answer is yes, for purposes of post-grant review by the USPTO how is the term "covered business method patent" to be understood, and does the patent at issue here qualify as a CBM patent?• if the PTAB correctly determines that under §18 of the AIA a patent comes within the definition of a CBM patent, what are the criteria for determining whether the patent is excluded from review under §18 because the patent falls within the statutorily-excepted category of "technological invention," and how do those criteria apply to the '350 patent?• if, in deciding the merits of the case—the validity of the challenged claims in the patent—the PTAB is called upon to engage in claim construction, does the PTAB apply the USPTO's general rule of the 'broadest reasonable interpretation,' or does it apply the judicial standard of the 'one correct construction'?• finally, on appeal at the final written decision stage to this court, during which [the Federal Circuit] must decide whether the PTAB applied the substantive tests for validity correctly, may a court determine whether as an initial matter the PTAB chose the correct substantive tests to apply, and did the PTAB apply them correctly here?

After the Court addressed these issues, it then turned to the merits of the PTAB analysis regarding the subject-matter-eligibility of the '350 patent.

Issue 1: Judicial Review of CBM Review Institution

In order for CBM review of a patent to be instituted in the PTAB, the patent in question must be a "covered business method patent," not a "technological invention," and it must be "more likely than not that at least 1 of the claims challenged in the petition is unpatentable." If review is instituted, a trial is held before the PTAB, and eventually the proceeding ends with a final written decision of the PTAB. Such a decision can be appealed to the Federal Circuit.

35 U.S.C. §324(e), which applies to both post-grant review and CBM proceedings, states that "[t]he determination by the Director [of the USPTO] whether to institute a post-grant review under this section shall be final and nonappealable." Before the Federal Circuit, Versata challenged the institution of the CBM proceeding for the '350 patent, contending that "[t]he PTAB does not have authority to review CBM patents for subject-matter eligibility under 35 U.S.C. §101." SAP countered by asserting that the Federal Circuit does not have "authority to review any questions decided by the PTAB in the course of making its initial decision to institute review, including whether ineligibility under §101 is a permissible ground for invalidation under the CBM authority invoked by the PTAB."

The Court addressed this point by analyzing the language of the statute, noting that this language "does not by its terms apply to limits on the authority to enter a 'final written decision' invalidating a patent . . . [i]nstitution and invalidation are two distinct actions by the PTAB." The Court further stated that barring judicial review of whether a patent can be invalidated under § 101 "would also run counter to our long tradition of judicial review of government actions that alter the legal rights of an affected person, a hallmark of the distinction between (generally reviewable) final agency action and (generally unreviewable) agency action that merely initiates a process." Additionally, the Court invoked a line of Supreme Court cases which held that "judicial review of a final agency action by an aggrieved person will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress."

Thus, the Court concluded that nothing "argues against this court, in an appeal of a final written decision, deciding contested questions regarding premises necessary to the agency's ultimate relied-on authority to take the action on appeal . . . just because the agency first addressed those premises at the initiation stage of the proceeding."

Issue 2: Is the '350 Patent a CBM Patent, and if so, is it a Technological Invention?

Section 18 defines a CBM patent as "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service." But CBM patents do not include "patents for technological inventions." Versata and SAP disagreed on how these provisions should be interpreted.

Particularly, Versata disagreed with the PTAB's conclusion that the '350 patent was a CBM patent. According to the PTAB, "the definition [of CBM patent should] be broadly interpreted to encompass patents claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity" (emphasis added). Thus, "[t]he PTAB . . . declined to interpret the statute as requiring that the patent's invention literally comprehend a financial product or service." Instead, the PTAB found that Versata's claims, which relate to monetary matters, were directed to financial products and services under § 18.

The Court determined that, as a matter of statutory interpretation, the definition of CBM patent "covers a wide range of finance-related activities," including those claimed by the '350 patent. The Court further noted that Congress broadly delegated rule-making authority to the USPTO with respect to CBM review, and that "the expertise of the USPTO entitles the agency to substantial deference in how it defines its mission." Consequently, the '350 patent falls within the definition of a CBM patent.

Section 18 also states that CBM patents do not include patents for "technological inventions." The statute does not define this term. In 37 C.F.R. § 42.301(b), the USPTO provided a definition stating that, in a technological invention, "the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution."

The Court expressed displeasure with the USPTO's definition. It first noted that the requirement of novelty and non-obviousness seemed to be tautological, since the USPTO would have already found that the claimed invention met these requirements when the patent under review was issued. The Court further criticized the rest of the definition as being circular, and not offering "anything very useful in understanding the meaning of the term."

Nonetheless, the USPTO has published its Patent Trial Practice Guide, which stated that the following characteristics, when present in a claimed invention, did not support the position that the invention is technological: "recitation of known technologies"; "reciting the use of known prior art technology"; and "combining prior art structures to achieve the normal, expected, or predictable result of that combination." In light of this definition, as well as the Supreme Court's holding in Alice Corp. v. CLS Bank Int'l that recitation of a general purpose computer to perform otherwise abstract steps "does not change the fundamental character of an invention," the Court agreed with the PTAB. In particular, the Court found that the '350 patent claimed a non-technical procedure "akin to creating organizational management charts."

As a result, the Court affirmed the PTAB's conclusion that the '350 patent is a CBM patent, and that it is not a technological invention.

Issue 3 – Claim Construction Standards

The USPTO adopted the "broadest reasonable interpretation" (BRI) standard for claim construction for AIA post-grant proceedings, including CBM reviews. This is the same standard used by examiners when analyzing claims in office actions for patent applications, but different from the narrower construction used by courts when reviewing the claims of issued patents. Naturally, Versata disagreed with the use of BRI.

The Court cut to the chase, invoking its recently-decided In re Cuozzo Speed Technologies, in which the majority approved the USPTO using BRI for PTAB inter partes review (IPR) claim construction proceedings. The Court noted that it was bound by its own precedent, and even though Cuozzo did not directly apply to CBM proceedings, it saw "no basis for distinguishing between the two proceedings for purposes of the PTAB's use of BRI in claim construction here."

Additionally, the Court found that even if a narrower claim construction standard had been used, "it is less than clear that the outcome in this case would be different." According to the Court, use of the "one correct construction" standard would result in the same interpretation of the claims.

Therefore, the Court affirmed the PTAB's claim construction.

Issue 4 – The Merits

Turning to the patent-eligiblity issues, the Court reviewed Versata's challenge to the PTAB's use of § 101 to invalidate the claims. First, the Court addressed whether the PTAB is permitted to use this section when determining the validity of claims in a CBM review, as well as whether the Federal Circuit can review such use.

With regard to appellate review, the Court noted that, for the same reasons discussed with respect to Issue 1 above, it has jurisdiction to review the PTAB's use of § 101 even though this use occurred when the PTAB made its decision to institute CBM review.

Turning to whether the PTAB was within its authority to apply § 101 as it did, the Court referred to § 328(a) of the statute, which states that the PTAB "shall issue a final written decision with respect to the patentability of any patent claim challenged." Meanwhile, § 321(b) states that a petitioner in a PGR proceeding "may request to cancel as unpatentable 1 or more claims of a patent on any ground that could be raised under paragraph (2) or (3) of section 282(b)." These paragraphs of § 282(b) specify that the validity of a patent can be challenged under "any ground specified in part II as a condition for patentability," § 112, or § 251. Part II of 35 U.S.C. lists only § 102 and § 103, but not § 101, as a "condition for patentability."

Versata latched on to this apparent discrepancy as a rationale for concluding that the PTAB was not authorized to use § 101 to invalidate patents in CBM proceedings. SAP countered that § 101 is generally understood to be an invalidity defense. The Court conceded that Versata's reading of the statute was arguably correct, but asserted that "both our opinions and the Supreme Court's opinions over the years have established that §101 challenges constitute validity and patentability challenges." The Court went on to state that Versata's reasoning was a "hyper-technical adherence" to form over substance, and that "[e]xcluding §101 considerations from the ameliorative processes in the AIA would be a substantial change in the law as it is understood, and requires something more than some inconsistent section headings in a statute's codification."

Moving on to the substantive issues, the Court applied the two-step Alice test. The first step is whether the claims incorporate a patent-ineligible concept (e.g., an abstract idea, law of nature, or natural phenomenon). The second step is whether the claims also supply an inventive concept that renders the claims patentable, despite the inclusion of the patent-ineligible concept. According to this test, an inventive concept is "an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself."

In discussing the contours of § 101, the Court contrasted the claims found to be unpatentable in cases such as Alice, Bilski v. Kappos, Ultramercial v. Hulu, and others with the only two cases involving claims that are still clearly patent-eligible post-Alice: Diamond v. Diehr and DDR Holdings v. Hotels.com. Regarding the latter case, the Court wrote "[w]e drew a distinction between the patent-eligible claims at issue and patent-ineligible claims in the past that had merely recited commonplace business methods aimed at processing business information, applying known business processes to particular technological environments."

Applying the first step of Alice, the Court held that the '350 patent involved "the abstract idea of determining a price, using organizational and product group hierarchies." The Court's reasoning here is a bit thin, as it merely concluded that the claims of the '350 patent were similar to those in Alice and Bilski, and that the claimed invention "is an abstract idea that has no particular concrete or tangible form or application."

Applying the second step, the Court found that each individual limitation was purely conventional, inherent in the abstract idea itself, or a well-known computer function (such as storing information). Considering the claim as an ordered combination led the Court to the same result, as "the components of each claim add nothing that is not already present when the steps are considered separately." Continuing to apply its walks-like-a-duck analysis, the Court justified its position by comparing the claimed invention to the patent-ineligible claims in Content Extraction & Transmission v. Wells Fargo Bank and OIP Techs. v. Amazon.com, while distinguishing the invention from Diehr and DDR Holdings.

Versata argued that its invention provides a "desired benefit for the computing environment: fewer software tables and searches, leading to improvements in computer performance and ease of maintenance." The Court, however, quickly shot down this line of reasoning by pointing out that the claims do not recite such an improvement, and that Verasta had admitted as such. Versata also challenged the PTAB's failure to consider the purported commercial success of the invention. But the Court stated that "[c]ommercial success is not necessarily a proxy for an improvement in a technology nor does it necessarily indicate that claims were drawn to patent eligible subject matter."

With a final caveat that "any given analysis in a §101 abstract idea case is hardly a clear guidepost for future cases arising under § 101," the Court affirmed the PTAB holding that Versata's claims are invalid.

July 14, 2015

There have been many voices raised in recent years against the patent system for a variety of political, policy, or personal reasons. Indeed, there is even a book entitled Don't File a Patent that sets out the authors' reasons against patenting. But if ever there was a company who would have a right to be disgruntled by the patent system it has to be The Medicines Company. TMC resembled the Job of patent law even before seeing two of its formulation patents struck down by a Federal Circuit panel earlier this month.

It is a tale well told (here and elsewhere) about TMC's travails during one of the longest patent law sagas that reached an end last year. That case involved TMC's efforts to obtain a patent term extension (PTE) pursuant to 35 U.S.C. § 154 for U.S. Patent No. 5,196,404 which claimed TMC's anticoagulant drug bivalirudin (sold under the brand name Angiomax®). After several years petitioning the U.S. Patent and Trademark Office and then pursuing its remedies in the courts, TMC received a PTE of 1,728 days for the '404 patent, which expired on December 15, 2014 at the end of the extension period.

The most recent case involved two other TMC patents, U.S. Patent Nos. 7,582,727 and 7,598,343; the following claim from each patent is representative:

Claim 1 of the '727 patent:

Pharmaceutical batches of a drug product comprising bivalirudin (SEQ ID NO: 1: [Phe Pro Arg Pro Gly Gly Gly Gly Asn Gly Asp Phe Glu Glu Ile Pro Glu Glu Tyr Leu]) and a pharmaceutically acceptable carrier for use as an anticoagulant in a subject in need thereof, wherein the batches have a pH adjusted by a base, said pH is about 5-6 when reconstituted in an aqueous solution for injection, and wherein the batches have a maximum impurity level of Asp9-bivalirudin that does not exceed about 0.6% as measured by HPLC.

Claim 1 of the '343 patent:

Pharmaceutical batches of a drug product comprising bivalirudin (SEQ ID NO: 1: [Phe Pro Arg Pro Gly Gly Gly Gly Asn Gly Asp Phe Glu Glu Ile Pro Glu Glu Tyr Leu]) and a pharmaceutically acceptable carrier, for use as an anticoagulant in a subject in need thereof, said batches prepared by a compounding process comprising: (i) dissolving bivalirudin in a solvent to form a first solution; (ii) efficiently mixing a pH-adjusting solution with the first solution to form a second solution, wherein the pH-adjusting solution comprises a pH-adjusting solution solvent; and (iii) removing the solvent and pH-adjusting solution solvent from the second solution; wherein the batches have a pH adjusted by a base, said pH is about 5-6 when reconstituted in an aqueous solution for injection, and wherein the batches have a maximum impurity level of Asp9-bivalirudin that does not exceed about 0.6% as measured by HPLC.

The patents claimed bivalirudin formulations for intravenous injections, wherein the pH is adjusted to make the formulation less acidic than a simple water or saline solution would be.

TMC had a long-standing (1997-2006) relationship with Ben Venue Laboratories to make bivalirudin for commercial sale. Its own attempts to produce formulations of the drug for commercial sale were less fruitful, the company being unable to produce batches of the drug that satisfied FDA criteria. These failures led the company to hire a consultant to "investigate" why there were problems making the drug, and in these efforts determined that there were certain ways of adjusting the pH that reduced the impurity levels to less than 0.6%; these discoveries resulted in the '343 and '727 patents.

However, prior to the critical date (i.e., more than one year prior to the filing date of the applications that resulted in the '343 and '727 patents), "The Medicines Company hired Ben Venue to prepare three batches of bivalirudin using an embodiment of the patented method." Importantly for the outcome, these were invoiced for services in preparing bivalirudin lots, "marked with a commercial product code and a customer lot number, and [] released to The Medicines Company for commercial and clinical packaging."

Thereafter TMC and Hospira became embroiled in ANDA litigation and in a bench trial the District Court found that Hospira's proposed product would not infringe and that TMC's patents were not invalid.

The Federal Circuit, addressing only the question of whether the on-sale bar invalidated TMC's patents, reversed in an opinion by Judge Hughes, joined by Judges Dyk and Wallach. The panel considered this question de novo (Robotic Vision Sys., Inc. v. View Eng'g, Inc., 249 F.3d 1307, 1310 (Fed. Cir. 2001)) and applied the Supreme Court's standard for applying the on-sale bar enunciated in Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67–68 (1998). Specifically, the on-sale bar applies if the activities in question occur before the critical date and the claimed invention "(1) was the subject of a commercial offer for sale; and (2) was ready for patenting." The District Court found that, while the invention was ready for patenting the circumstances surrounding the transfer of the drug from Ben Venue labs to TMC did not amount to a commercial offer for sale. The District Court's basis for its determination that there was no commercial sale was that "(1) Ben Venue only sold manufacturing services, not pharmaceutical batches; and (2) the batches fall under the experimental use exception." In the Federal Circuit's opinion, the panel agreed that Ben Venue "invoiced the sale as manufacturing services and title to the pharmaceutical batches did not change hands," but this was not dispositive. According to the opinion, the purpose of the on-sale bar must be considered, which is "to preclude attempts by the inventor or his assignee to profit from commercial use of an invention for more than a year before an application for patent is filed," citing D.L. Auld Co. v.Chroma Graphics Corp., 714 F.2d 1144, 1147 (Fed. Cir.1983). What determines whether the on-sale bar has been breached is when an inventor has commercially exploited the invention before the critical date. Applying this and other precedent (including W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540 (Fed. Cir. 1983)), the panel found "no principled distinction between the commercial sale of products prepared by the patented method []and the commercial sale of services that result in the patented product-by-process" that occurred in this case. Interestingly, the panel identified what was sold as the services themselves, whereas the claims are directed to pharmaceutical batches. The lynchpin of the argument equating the activities the panel considered were sufficient to trigger the on-sale bar appears to be the Court's interpretation of these claims as being "product-by-process" claims. The opinion also states that "the sale of the manufacturing services here provided a commercial benefit to the inventor more than one year before a patent application was filed," thus implicating the policy considerations the panel identified as motivating the on-sale bar. It did not help (but it is unclear why it was considered relevant) that Ben Venue labeled the batches it provided with "commercial product codes and customer lot numbers" or that each batch was worth $10 million.

According to the Court, "[t]o find otherwise [i.e., that this was not a commercial sale] would allow The Medicines Company to circumvent the on-sale bar simply because its contracts happened to only cover the processes that produced the patented product-by-process."

The panel also distinguished the facts at bar with cases where "the inventors have requested another entity's services in developing products embodying the invention without triggering the on-sale bar," citing Trading Techs. Int'l, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1361–62 (Fed. Cir. 2010). The Court contrasted the "secret, personal use[s]" at issue in the Trading Technologies case (where no on-sale bar violation was found) with the "commercial exploitation" (emphasis in the opinion) in the case at bar.

The opinion also notes that whether or not TMC knew that the product "inherently" contained the claimed properties ("maximum impurity level[s] of Asp9-bivalirudin that does not exceed about 0.6% as measured by HPLC") was "irrelevant" to the on-sale bar question, citing Abbott Labs. v. Geneva Pharm., 182 F.3d 1315, 1319 (Fed. Cir. 1999).

With regard to the District Court's application of the experimental use exception, the panel cited In re Cygnus Telecomm. Tech., LLC Patent Litig. for the proposition that "experimental use cannot occur after a reduction to practice." 536 F.3d 1343, 1356 (Fed. Cir. 2008). In rejecting TMC's argument that it "did not appreciate the maximum impurity level limitation of the claimed invention until after twenty-five batches of bivalirudin were manufactured according to [the] new process," the Court avoided the argument that an invention cannot be "ready for patenting" if it has not yet been conceived. The Court also avoided the fact that there cannot be nunc pro tunc conception by seemingly begging the question, stating "where an invention is on sale, conception is not required to establish reduction to practice," citing Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321, 1331 (Fed. Cir. 2001), and that "[t]he sale of the [invention] in question obviates any need for inquiry into conception" citing Abbott Labs. (The opinion further limits the applicability of these citations to the question before it, by admitting that these cases did not involve experimental use, and conceding that the experimental use exception may be raised "even if the invention had been reduced to practice if the inventor was unaware that the invention had been reduced to practice (i.e., worked for its intended purpose) and continued to experiment," citing New Railhead Mfg., L.L.C. v. Vermeer Mfg. Co., 298 F.3d 1290, 1297 (Fed. Cir. 2002).) Because "[t]his is not a situation in which the inventor was unaware that the invention had been reduced to practice, and was experimenting to determine whether that was the case" and "[t]he batches sold satisfied the claim limitations, and the inventor was well aware that the batches had levels of Asp9-bivalirudin well below the claimed levels of 0.6%" the Court held that the experimental use exception did not apply.

Finally, the panel rejected TMC's argument that the invention was not ready for patenting, stating that "because the invention was sold, for the reasons described [elsewhere in the opinion], we find that the Ben Venue batches reduced the invention to practice" and "[t]hus, the district court did not clearly err in finding the invention was ready for patenting." While consistent with the rest of the opinion, this reasoning seems to collapse the Pfaff two-prong test into the sole question of whether there was a commercial sale, because according to the opinion the existence of such a commercial sale means that the invention was reduced to practice and thus ready for patenting (and as stated above, without regard to whether the inventor conceived the invention or not).

As a practical matter TMC is faced with the situation (with regard to Hospira) that it faced before: because Hospira's product was adjudged not to infringe that company should be able to obtain FDA approval and enter the marketplace with a generic bivalirudin to compete with Angiomax®. All of the patents related to the '404 patent have expired (according to PTO records) and neither the '727 nor the '343 patents appear to have any related patents or patent applications in a priority chain. TMC's valiant pursuit of the PTE to which it was entitled gained them an additional 1,726 days of exclusivity but it appears that whatever protection the patent system afforded them is now over.

July 09, 2015

Earlier this week, the Federal Circuit issued an order denying a petition for rehearing en banc in the In re Cuozzo Speed Technologies, LLC case. As we have previously reported, this case was the first appeal of the first IPR Final Written Decision for the first IPR ever filed. The original opinion not only addressed the substance of the underlying case, but it also approved of some of the most contentious rules promulgated by the Patent Office for these proceedings. Moreover, Judge Newman provided a strongly worded dissent. As such, many commentators believed that the entire Court would take up such issues as whether the "Broadest Reasonable Interpretation" (BRI) is the correct claim construction standard in these post-grant proceedings. Nevertheless, when the poll was requested and taken for rehearing en banc, it failed. The Order was accompanied by a concurring opinion authored by Judge Dyk, the author of the original opinion, and was joined by Judges Lourie, Chen, and Hughes. Chief Judge Prost, and Judges Newman, Moore, O'Malley, and Reyna provided a joint dissent from the petition denial. Finally, Judge Newman provided her own dissent. Interestingly, the original panel (Judges Newman, Clevenger, and Dyk) issued an order granting a petition to clarify the underlying decision, withdrawing that decision, and replacing it with the revised opinion and dissent accompanying the order. The changes made to that decision will be the subject of an upcoming post.

The closeness of the vote is intriguing, and presents some interesting issues. It would have taken a vote of six judges in active service to rehear the case en banc, given that a majority of active judges must agree to rehear the case, and at the time of the poll the Court had eleven active circuit judges. The poll therefore failed by only one vote, with the five dissenting judges indicating that they would have reheard the case en banc. Of course, the Senate recently confirmed Kara Stoll to be the next Circuit Judge of the Federal Circuit, so the Court will soon have its maximum number of twelve active judges.

If Cuozzo decides to petition the Supreme Court to hear its case, the close en banc vote may indicate to the Supreme Court that there is an intra-circuit split on the application of the BRI standard in post-grant proceedings. In addition, the principal dissent from the denial of the petition is unusual in that it is a joint dissent of five judges rather than an opinion authored by one judge and joined by others (like the concurrence from the denial of the petition). Such a joint dissent may also indicate the importance of the issue to the Supreme Court. Given that the Supreme Court addressed the standard of review for claim construction in district court litigation last Term in Teva v. Sandoz, the Court may be inclined to address the related issue of the standard of claim construction for Patent Office proceedings. The Supreme Court has also not yet granted certiorari in a patent case for next Term.

It will also be interesting to see if future litigants will petition the Federal Circuit again to rehear en banc the broadest reasonable interpretation standard. The Court declining this week to consider the issue en banc in this case does not mean it will not do so in the future. For instance, of the six judges that did not dissent from the denial of the petition, two of them did not join the concurrence from the denial of the petition, Circuit Judges Wallach and Taranto. In addition, Judge Stoll will also likely be available to consider a future petition directed to the BRI standard. Perhaps a different majority of the Court will decide to address the issue en banc in a future case.

Judge Dyk's Concurence

Judge Dyk concurred in the per curium order to address the dissenting opinions' arguments why BRI should not be applied in IPR proceedings. First, BRI has been used by the Office for more than a century. Second, there is no demonstrated congressional intent in the America Invents Act (AIA) to change the use of this claim construction standard. Curiously, the concurrence did note that Congress is seeking to correct this "lack-of-intent" oversight. Nevertheless, the fact that curative legislation is now pending in both the House and Senate is insufficient to demonstrate congresses' prior intent that BRI should not be the standard.

The Joint Dissent

As mentioned above, five Federal Circuit Judges issued a joint dissent. Their position can be summed up in the two sentences near the end of the dissent:

But in IPRs, as in district court litigation, an already issued claim is being analyzed solely for the purposes of determining its validity. In this context, it makes little sense to evaluate the claim against the prior art based on anything than the claim's actual meaning.

Joint Dissent from Denial of Petition, at 9. Instead, these Judges would have required that claims in these new post-grant proceeding be given their actual meaning.

The joint dissent first took issue with the panel majority's conclusion that Congress "implicitly approved" the claim construction standard adopted by the Patent Office. Instead, they would have applied the rule that silence means just that -- silence. The new post-grant review proceedings established by the America Invents Act were a "wholly novel procedure," meant to be more adjudicatory than examinational, as most every other Patent Office proceeding is. Because these proceedings have no real counterpart at the Office, nothing can be gleaned from congressional inaction. In fact, the dissent challenged the panel majority for failing to explain why congressional silence did not, instead, signal that it had intended the same legal framework as used in district courts.

Second, the joint dissent asserted that existing case law not only failed to support the panel majority's conclusion, but it supported the opposite conclusion. The prior cases made clear that the BRI standard was appropriate before issuance of a patent to clarify "the metes and bounds of an invention during the back-and-forth between the applicant and examiner when claims are not yet in their final form." Id. at 3 (citing In re Prater, 415 F.2d 1393, 1405 (CCPA 1969)). It is this same "give-and-take" that has existed in previous post-grant proceedings in which BRI has been approved. In contrast, in district court adjudications, the courts arrive at a "'concise statement[] of the subject matter for which the statutory right to exclude is secured by a grant of the patent.'" Id. at 4 (quoting Multiform Desiccants, Inc. v. Medzam, Ltd., 133 F.3d 1473, 1476 (Fed. Cir. 1998)). In other words, it is the difference between the use of the BRI standard and determining what the patent claims actually mean. And because an IPR is a "curtailed, trial-like proceeding meant to efficiently resolve a challenge to patent validity," the claim construction standard used in these proceedings should be no different than that used in district court.

Finally, the joint dissent took issue with the panel majority's holding that the Court should apply Chevron deference to Patent Office's promulgated rules. First, they did not think it was clear that deference was warranted. The only congressional grant of authority was for procedural regulations, according to the joint dissent, and therefore should not apply to the claim construction standard. But, assuming for argument sake that claim construction was more procedural in nature, the joint dissent would still not believe that deference would be warranted because the PTO regulation is contrary to congressional intent. Nevertheless, even under the deferential standard, the joint dissent would have found the BRI standard unreasonable.

Judge Newman's Dissent

Judge Newman authored her own dissent to address the concerns expressed by the amicus curiae. In addition to the appellant and the Office of the Solicitor, briefs were filed in this case by the Pharmaceutical Research and Manufacturers of America (PhRMA), the Intellectual Property Owners Association (IPO), the New York Intellectual Property Law Association (NYIPLA), and a collective of companies (3M, Caterpillar, Eli Lilly, General Electric, Glaxosmithkline, Illinois Tool Works, Johnson & Johnson, Pfizer, Procter & Gamble, and Sanofi US) that reportedly "collectively hold tens of thousands of patents." In fact, based on this showing, Judge Newman made the sweeping comment that the BRI standard "has no defender other than a majority of the Federal Circuit court."

Judge Newman noted the collective's concern that the currently used claim construction standard is inconsistent with the AIA and is against sound patent policy. The resulting environment "is costly to the inventive community and discourages innovation." Moreover, the application of different standards in these proceedings and in district court results in no estoppel effect and encourages gamesmanship. Judge Newman also noted the IPO's concern that the BRI standard is upsetting the settled expectations of inventors, patentees, and anyone else that depends on the patent system. PhRMA highlighted the importance of the patent system for medical advances, where approximately $40-50 billion in investments are made annually. Finally, the NYIPLA stressed that the claim construction standard is of great importance and should be heard by the Court en banc.

Judge Newman continued by stressing that all of the amici curiae were in agreement that these new post-issuance adjudicative proceedings are important. Nevertheless, the legislative purpose is thwarted by the application of a different claim construction standard before the Board. This was clearly not the legislative intent, and as Judge Newman also pointed out, there is corrective legislation in bills that have already been approved by both the House and Senate committees, although "[p]rompt resolution is reported to be unlikely." She then provided a list of why the BRI standard is inappropriate:

• Claim construction should be the same for validity and infringement;• Claim amendments in AIA proceedings require permission, and are limited even when permitted;• A patentee must now defend a broader construction than it ultimately obtained during prosecution;• The AIA procedures are surrogate tribunals for determining validity, and the claim construction standard should therefore be the same;• The public notice of patent claims requires the correct claim construction;• There is no guidance on what is too broad -- therefore predictability is replaced with fuzziness and uncertainty;• The PTO tribunals are to review the validity of patents, and it was expected that they would apply the correct law of validity.

Finally, Judge Newman took issue with the concurrence's comment that BRI has been used by the Patent Office for a hundred years. In patent interferences, according to Judge Newman, the Office does not apply the "broadest" interpretation of anything. And, in reissue proceedings, the goal is correctness, not breadth. Therefore, according to Judge Newman, the deciding "question before this court is not whether to 'eliminate' BRI, but whether to impose it on issued patents, where it has not previously reposed."

July 08, 2015

Last month, in Mohsenzadeh v. Lee, the Federal Circuit affirmed the decision by the District Court for the Eastern District of Virginia granting summary judgment to the Director of the U.S. Patent and Trademark Office that the Office had properly calculated the Patent Term Adjustment (PTA) for U.S. Patent Nos. 8,352,362 and 8,401,963. The instant appeal involves 35 U.S.C. § 154(b)(1)(A), which requires that the Office send a notification under § 132 or a notice of allowance under § 151 to the applicant within fourteen months of the date of filing of an application or the commencement of national stage of an international application. At issue in the instant appeal was the impact of a delayed restriction requirement, one type of notification under § 132.

Appellant Hossein Mohsenzadeh filed U.S. Application No. 09/899,905 on July 6, 2001. More than five years after the '905 application was filed, the Office issued a restriction requirement restricting the claims into four groups. The group of claims that Mohsenzadeh elected to prosecute issued as U.S. Patent No. 7,742,984, with the Office granting Mohsenzadeh 2,104 days of PTA, of which 1,476 days was due to the Office's delay in issuing the restriction requirement. Mohsenzadeh filed two divisional applications from the '905 application, each corresponding to a group of claims identified as a separate invention in the restriction requirement issued for the '905 application. Those applications later issued as the '362 and '963 patents, with the Office granting 0 days of PTA to both patents.

Mohsenzadeh requested reconsideration of the PTA determinations for the '362 and '963 patents, arguing that both patents were entitled to 1,476 days for the Office's delay in issuing a restriction requirement in the '905 application. The Office denied the requests, and pursuant to 35 U.S.C. § 154(b)(4)(A), Mohsenzadeh filed an action challenging the denials in the Eastern District of Virginia. The Office moved for summary judgment, which the District Court granted, finding that § 154 unambiguously requires that PTA apply for delays that occurred during the prosecution of the actual application from which the patent directly issued, and not the application from which it derived priority. The District Court also found that the Office's interpretation of § 154 was reasonable and entitled to deference.

On appeal, Mohsenzadeh argued that § 154 was enacted to adjust the terms of all patents impacted by Office delays, and relied on the text of the statute to support that argument. The relevant part of the statute reads (emphasis added):

[I]f the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to— (i) provide at least one of the notifications under section 132 or a notice of allowance under section 151 not later than 14 months after— (I) the date on which an application was filed under section 111(a); or (II) the date of commencement of the national stage under section 371 in an international application;. . .the term of the patent shall be extended 1 day for each day [of delay].

Mohsenzadeh argued that delays in the issuance of "an original patent" (the '362 and '963 patents) were caused by the delay in providing a notification in "an application" (the '905 application). The Office responded by arguing that the history of amendment of § 154(b)(1)(A)(i) confirms that Congress was referring to a single application throughout, noting that an earlier draft of the statute omitted (i)(II) and used the definite article, referring to "theapplication was filed under section 111(a)" (emphasis added). However, when Congress amended the statute to include (i)(II), the indefinite article was used for both (i)(I) and (ii)(II).

In affirming the District Court's grant of summary judgment to the Office, the Federal Circuit determined that "[t]he language of the provision of the patent term adjustment statute at issue, 35 U.S.C. § 154(b)(1)(A), clearly shows that Congress intended delay in the prosecution of an application to be restored to a single patent, the patent issuing directly from that application." According to the Court, support for its determination could be found in the amendment of § 154 to change "the application" to "an application," which "signifies that Congress did not intend for patent term adjustments in continuing applications to be made for delays in parent applications." As the Federal Circuit explained, "[t]he indefinite article, thus, appears not to allow for reference to a different application than the one ripening into 'an original patent,' but simply to signify Congress' adjustment of the statute to account for the fact that a patent may arise either from a domestic application or an international application." "Because the plain language of 35 U.S.C. § 154(b)(1)(A) does not provide patent term adjustments in continuing applications based on delays in the prosecution of parent applications," the Federal Circuit affirmed the District Court's grant of summary judgment.

July 07, 2015

On September 23, 2010, Eon filed suit against seventeen defendants in the District Court of the District of Delaware, alleging infringement of U.S. Patent No. 5,663,757. During the case, the '757 patent went through two reexaminations. The claims were amended in the first reexamination, and then confirmed valid as amended in the second reexamination. After the reexaminations, the District Court granted summary judgment for the defendants, holding that all claims of the '757 patent were indefinite under 35 U.S.C. § 112 ¶ 6.

Eon appealed. On May 6, 2015, Chief Judge Prost of the Federal Circuit authored a decision clarifying the structure that patentees must disclose when using means-plus-function language in software patents. Judges Newman and Bryson joined the opinion.

The '757 patent is directed to software embodied in a "local subscriber data processing station that operates in tandem with a television to interconnect various interactive features of the television." The software supports actions including "impulse purchase transactions with immediate payment, audience participation voting, and sorting television programs by theme." Eon's infringement position centered on the defendants' alleged manufacture and use of a smartphone as a modern iteration of the '757 patent's local subscriber data processing station.

Example claim terms that were held to be indefinite include "means under control of said replaceable software means for indicating acknowledging shipment of an order from a remote station" (claim 7); and "means controlled by replaceable software means operable with said operation control system for . . . reconfiguring the operation modes by adding or changing features and introducing new menus" (claims 1-6, 8-10).

35 U.S.C. § 112 ¶ 6 states that if the patentee uses means-plus-function claim limitations, the claims will be construed to cover only the corresponding structure in the specification and the equivalents thereof. It is well-settled that the "structure" for functions performed by software is the particular algorithm that performs these functions, rather than just the computer hardware that the software runs on. In Aristocrat Techs. Austl. Pty Ltd. v. Int'l Game Tech., the Federal Circuit stated that "in cases involving a computer-implemented invention in which the inventor has invoked means-plus-function claiming, this court has consistently required that the structure disclosed in the specification be more than simply a general purpose computer or microprocessor." There is one narrow exception to this rule, as explained in In re Katz Interactive Call Processing Patent Litigation, that a standard microprocessor can serve as a sufficient structure if the functions claimed "can be achieved by any general purpose computer without special programming."

While Eon did not dispute that the '757 patent failed to disclose an algorithm, it did attempt to invoke the Katz exception. But, the Federal Circuit had only analyzed this exception once, finding that it did not apply. In Ergo Licensing, LLC v. CareFusion 303, Inc., the Court held that "[i]t is only in the rare circumstances where any general-purpose computer without any special programming can perform the function that an algorithm need not be disclosed." Eon attempted to distinguish this case by claiming the '757 patent does not involve any "special programming" because it is relatively simple to implement.

The Federal Circuit rejected this contention, stating a microprocessor can only serve as the structure if the claimed function is "coextensive" with a microprocessor itself. The Court's three examples of coextensive functions are receiving data, storing data, and processing data. The Court followed this reasoning to hold "[a] microprocessor or general purpose computer lends sufficient structure only to basic functions of a microprocessor . . . [a]ll other computer-implemented functions require disclose of an algorithm."

The Court further stated that the purpose of § 112 ¶ 6 is to "limit . . . the scope of the claim to the particular structure disclosed, together with equivalents." Eon contradicted this purpose, because claiming a general purpose computer or microprocessor does little or nothing to limit the ways in which the claimed functions can be implemented. Thus, "when a patentee invokes means-plus-function claiming to recite a software function, it accedes to the reciprocal obligation of disclosing a sufficient algorithm as corresponding structure."

Eon did not argue that the functions at issue are coextensive with those of a microprocessor, and its expert stated that a person skilled in the art would need to consult algorithms outside the specification to implement the claimed functions. As a result, the Federal Circuit found that the mere disclosure of a microprocessor was insufficient for the '757 patent, and therefore the claims containing those terms are indefinite.

This case reiterates that an algorithm must almost always be disclosed in the specification if the patentee is using means-plus-function claiming. The narrow interpretation of the Katz exception will likely deter future parties from arguing that a general purpose computer or microprocessor serves as a sufficient structure for means-plus-function claim limitations. However, the Court still left the boundaries of the Katz exception undefined. Microprocessors are also capable of carrying out tasks such as adding, subtracting, multiplying, and dividing numbers, as well as moving data. Most microprocessors are also capable of floating point and even graphics operations. Since the Court seems to have limited the Katz exception to only "basic functions" of a microprocessor, it remains unclear where the Court would draw the line between such a basic function and one that is more advanced. Thus, the Court has left room -- albeit not much -- for parties using more advanced functions to argue that these functions are supported by standard microprocessors.

July 02, 2015

The June 12, 2015 decision of the Federal Circuit in the above case has been discussed by Kevin Noonan in his posting of 22 June, but it is believed that the factual and legal background could benefit from further discussion.

It is convenient to consider claims 1 and 2 of US Patent No. 6,258,540 together since PCR is the technique exemplified and both claims 1 and 2 were held not to be patent eligible.

The kernel of the opinion of Judge Reyna is contained in the two passages set out below:

It is undisputed that the existence of cffDNA in maternal blood is a natural phenomenon. Sequenom does not contend that Drs. Lo and Wainscoat created or altered any of the genetic information encoded in the cffDNA, and it is undisputed that the location of the nucleic acids existed in nature before Drs. Lo and Wainscoat found them. The method ends with paternally inherited cffDNA, which is also a natural phenomenon. The method therefore begins and ends with a natural phenomenon. Thus, the claims are directed to matter that is naturally occurring.

Like the patentee in Mayo, Sequenom contends that the claimed methods are patent eligible applications of a natural phenomenon, specifically a method for detecting paternally inherited cffDNA. Using methods like PCR to amplify and detect cffDNA was well-understood, routine, and conventional activity in 1997. The method at issue here amounts to a general instruction to doctors to apply routine, conventional techniques when seeking to detect cffDNA. Because the method steps were well-understood, conventional and routine, the method of detecting paternally inherited cffDNA is not new and useful.

It is useful to consider the steps of the claimed method against these statements to determine the extent to which they can legitimately be held to fall within the natural phenomenon exclusion. Detail in addition to the express wording of the claim is believed to indicate what would be implicit to a skilled reader.

The first step requires the use of a maternal serum or plasma sample from a pregnant female. In Example 1, 10μl of centrifuged and heated plasma or serum are placed into a 0.5 ml Eppendorf tube. While the presence of cffDNA in the maternal serum or plasma is a natural phenomenon, the decision to make use of the serum or plasma sample for amplification and detection is arguably a step towards an application of that phenomenon.

The second step involves addition of pair of primers to the blood or serum sample. In Example 1 of the patent in issue these are Y1.7 andY1.8 which are specific for the Y-chromosome which is passed only from father to son and determines the sex of the fetus. Those primers enable amplification of a sequence of the Y-chromosome of length 198 base pairs. The experimental details in Example 1 are less than complete, but comparison with Example 2 shows that ~300 nM of each amplification probe would have been added and 200μM each of dATP, dCTP, dGTP and dUTP to provide the monomeric nucleotides needed for polymerisation, together with polymerization enzyme and incidental materials. The serum or plasma samples were then subjected to 60 cycles of polymerase chain reaction in a PCR machine, 30-40 cycles being generally regarded as sufficient for the reaction to go to completion. As explained at page 3 of the slip opinion, amplifying cffDNA results in a single copy, or a few copies, of a piece of cffDNA being exponentially multiplied across several orders of magnitude, generating thousands to millions of copies of that particular DNA sequence to reach detectable levels. If a sample originally contains one or more parentally-derived Y-chromosomes, then after amplification thousands or millions of copies of the selected 198 bp short sequence are present in it.

The product of the second step could therefore most appropriately be described as a composition of matter which is for that reason inherently within the realm of patent-eligibility, said composition comprising the blood or serum of the sample, the naturally occurring cffDNA, thousands to millions of copies of the the Y-chromosome short sequence and residual primer, nucleotides, enzyme and other starting materials. Even if concentration is focused on the short sequences to the exclusion of other relevant process and composition of matter features, the short sequence copies are a wholly artificial creation, being the result of the synthetic chain reaction and to describe them as a natural product gives rise to an error, on the figures of the slip opinion, of 103-106 which is on any view an exuberant margin. They have new utility compared to the original blood or serum sample insofar as they are present at levels that are detectable in subsequent test procedures whereas the original cffDNA is not.

Furthermore in equating the selected and amplified short sequences with a natural product, the Court is implicitly disregarding long-established precedents such as Parke-Davis & Co. v. H. K. Mulford Co (adrenalin), Kuehmsted v. Farbenfabriken of Elberfeld Co. (aspirin) and Merck & Co. v. Olin Mathieson Chemical Corp (Vitamin B12) which show that an isolated or purified natural product having new utility is patent-eligible. By the same logic, the amplified short sequences are a new and different product having new utility in that they have been brought to detectable levels and cannot be equated simply with the corresponding region of the Y-chromosome as a natural product.

The third step involves detecting the presence of the paternally inherited nucleic acid, and although specified at a high degree of generality is not unduly broad having regard to the range of tests that can be performed. In Example 1, the mere presence of a Y-positive signal distinguishes a male fetus from a female fetus. In Example 2, quantitative PCR is used as a screening marker for aneupoloid pregnancies e.g. Downs syndrome, Example 3 describes tests for RhD, Example 4 describes tests for pre-eclampsia and Example 5 provides data showing the very high concentration of fetal DNA in serum or plasma compared to the cellular fraction of maternal blood.

Prometheus requires the claim to be considered not merely as an isolated aggregation of features but as an ordered combination. If that is done, the new result emerges of a test of high sensitivity for a range of medical conditions that can be applied early in pregnancy and avoiding the risks to the fetus inherent in amniocentesis and that starts from a new and hitherto overlooked starting material and that, in the words of Judge Reyna "revolutionised medical care." The question in Prometheus was whether the described processes added enough, and it is submitted that the benefits achieved should not have been dismissed as adding nothing of significance.

The proposition that because the method steps were well-understood, conventional and routine, the method of detecting paternally inherited cffDNA is not new and useful verges on the incomprehensible. Essentially the same claim was examined by the EPO Appeal Board T 0146/07 ISIS/Prenatal diagnosis. The closest prior art was a paper from one of the inventors, Dr Lo. That paper describes a method for the detection of foetal RhD sequences in peripheral blood of sensitized RhD-negative pregnant women. In the earlier method described, antecubital venous blood was collected from pregnant women and DNA was extracted from the buffy coat fraction, i.e., peripheral blood mononuclear cells (PBMC) isolated from maternal peripheral blood. Foetal RhD sequences were detected by PCR using specific primers. The method therefore differed from that now claimed in that the presence of nucleic acid of foetal origin was detected in buffy coat cells rather than in maternal serum or plasma. As explained in the patent in issue, it was surprisingly found that foetal DNA is enriched in maternal plasma or serum compared to the amount present in the cellular fraction. The Opposition Division found that a skilled person starting from the cited document and confronted with the problem of providing a more sensitive method for detecting foetal blood cells would not have derived the solution claimed. In affirming this finding, the Appeal Board held that even of the technical problem were reformulated to the lesser task of finding an alternative source of foetal nucleic acid a skilled person starting from Dr Lo's paper would not have been motivated to consider serum or plasma samples. Lack of industrial applicability was not a ground of opposition, but nevertheless it is disturbing that subject matter held inventive by the EPO should be summarily dismissed as ineligible in the U.S. under §101.

The steps quoted from the Prometheus opinion recur in Alice and to that extent may reflect a settled view within the Supreme Court. However, it is submitted that it is inappropriate to select specific passages from these opinions without taking into account the caution with which they were originally expressed, and the warning at the end of the Prometheus opinion that a new protective rule that seems to suit the needs of one field might produce unforeseen results in another. It is difficult to avoid the conclusion that in Ariosa the Court is extending the second part of the two-part Prometheus test beyond the original intention of the Supreme Court and has fallen into the trap of making its findings of fact to fit the earlier opinions on which it wished to rely, rather than straightforwardly finding the objective facts and then applying the appropriate jurisprudence to them.

* Mr. Cole is a European Patent Attorney and Partner with Lucas & Co. in Warlingham, Surrey, UK and Professor of IP Law at Bournemouth University.

On June 18, 2015, the Federal Circuit handed down its second opinion in the Teva Pharmaceuticals USA v. Sandoz Inc. case. And, much like with the first opinion in 2013, the Court reversed the District Court's holding with regard to claim 1 of U.S. Patent No. 5,800,808 ("the '808 patent") -- the only patent still pending. A split panel decided that, even though the District Court made factual determinations about how one skilled in the art would understand this claim, specifically the claim term "molecular weight," the claim was nevertheless indefinite. Of course, in the interim, for the same case, the Supreme Court reversed long standing Federal Circuit precedent regarding the level of deference to be afforded a District Court's factual determinations during claim construction. Or at least it thought it did. Judge Moore, writing the opinion for the Court, stated that it did not matter if they gave deference to the lower court in this case. In contrast, on June 23, 2015, the Federal Circuit determined in the Lighting Ballast Control LLC v. Philips Electronics North America remand that the deference to which the District Court's factual determinations were entitled dictated affirmance.

The background of the Teva case has been addressed in previous posts (see "Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. (Fed. Cir. 2013)") Basically, this case involves the drug Copaxone®, which was approved for the treatment of multiple sclerosis. The active ingredient is copolymer-1, or glatiramer acetate, which is a polypeptide product that consists of four different amino acids (alanine, glutamic acid, lysine, and tyrosine). Copolymer-1, however, is a mixture of individual polymer molecules with different constituent ratios, and different molecular weights. Therefore, it is often expressed as "average molecular weight." Statistically speaking, though, there are at least three ways to calculate average molecular weight: peak average molecular weight (Mp), number average molecular weight (Mn), and weight average molecular weight (Mw). Mp is the molecular weight of the most abundant molecule in the sample; Mn is the combined total mass of all of the molecules in the sample divided by the total number of molecules; and Mw is similar to number average molecular weight, except instead of dividing the sample by total number of molecules, you take into account the weight fraction of each molecule.

Teva's specification was silent as to which molecular weight measurement was used, or the appropriate way to measure it. The only mention was to the use of size exclusion chromatography (SEC), which can be used to obtain all three values. Moreover, the applicants made statements in related cases that compounded the problem. First, in the prosecution history of one of the patents, the applicants said that "[o]ne of ordinary skill in the art, upon reviewing the specification, would understand that 'average molecular weight' refers to the molecular weight at the peak of the molecular weight distribution curve," or Mp. However, in response to an identical rejection in an earlier related application, the patentees said that ""[o]ne of ordinary skill in the art could understand that kilodalton units implies [sic] a weight average molecular weight," or Mw. Teva's expert explained that one skilled in the art would have understood that average molecular weight could only be Mp because the use of SEC without more would suggest it (because determining Mn and Mw would require additional calculations). The District Court found this testimony credible. Moreover, the District Court found that one skilled in the art would have recognized that the statement in the one application file history was false. In the first Teva v. Sandoz opinion, the Federal Circuit did not credit these findings and held the claims with this claim term to be indefinite.

On remand from the Supreme Court, the Federal Circuit clarified that the only relevant evidence was intrinsic. As such, even under the Supreme Court's analysis, whether the claims were indefinite was purely a legal question. In fact, this is not inconsistent with the original Federal Circuit holding: "On de novo review of the district court's indefiniteness holding, we conclude that Dr. Grant's testimony does not save Group I claims from indefiniteness." Just to be clear, the Court acknowledged that it found no error with the District Court's determination of how a skilled artisan would have understood the teaching of the specification ("And we see no clear error in that fact finding -- that one of skill in the art could read Mp from a chromatogram without further calculation and that Mw or Mn would both require further calculations."). This factual finding, however, did not change the fact that there are at least three different types of "average molecular weight" that are calculated three different ways and could give three different values. In fact, neither party disputed that there was "no express definition" for the claim term, and that the terms Mp, Mw, and Mn were not used in the specification.

The case, therefore, turned on the "internal coherence and context assessment" test articulated by the Federal Circuit. In fact, the Court stated that this test was itself a question of law that could not be converted to a factual question by the introduction of expert testimony. As such, the testimony of Teva's expert did nothing to resolve the ambiguity of which molecular weight measurement to use.

In addition, when the Federal Circuit first decided the case, it found that the contradictory statements in the prosecution history of related applications rendered the ambiguity of the claim term insoluble. Of course, in the interim, the Supreme Court rejected the "insolubly ambiguous" standard, and articulated the "reasonable certainty" standard in the Nautilus, Inc. v. Biosig Instruments, Inc. case. As the Federal Circuit noted, somewhat snarkily, when it decided that case on remand "[t]he Court has accordingly modified the standard by which lower courts examine allegedly ambiguous claims; we may now steer by the bright star of 'reasonable certainty,' rather than the unreliable compass of 'insoluble ambiguity.'" Therefore, even assuming that a skilled artisan would recognize the scientifically erroneous claim made by the patentees, the specification would still not have informed a person of ordinary skill in the art of the scope of the invention with reasonable certainty.

Interestingly, the only Judge on the current panel that was on the panel in 2013 was Judge Moore, who wrote the opinion for the Court in both instances. In the 2013 Teva v. Sandoz case, then-Chief Judge Rader and District Judge Benson of the District of Utah sitting by designation completed the panel. On remand, these two judges were replaced by Judges Mayer and Wallach. You probably could not find a member of the Federal Circuit that has been more outspoken against the de novo standard of claim construction review as Judge Mayer. It seemed almost fitting that he had an opportunity to dissent from this case.

In dissent, Judge Mayer cited the Supreme Court in Teva: "'[I]n some instances, a factual finding may be close to dispositive of the ultimate legal question of the proper meaning of [a claim] term in the context of [a] patent." It stood to reason, therefore, that this was "such a case." Not surprisingly, Judge Mayer criticized the majority for not giving the District Court's "extensive fact-finding" any deference. In cases with complex technology, he pointed out, it is often necessary to look outside the patent and its prosecution history. Perhaps in an attempt to trigger another bite at the Supreme Court apple, a disproportionate number of Judge Mayer's citations were to Supreme Court precedent -- some dating back to the 1800s. Judge Mayer was also critical of the citation to the prosecution history -- because even though statements made in the prosecution of related applications may be used to interpret claims, the same is not true to find a claim indefinite. This is even truer when the erroneous or conflicting statements came years after the patent at issue issued. However, the majority would likely agree with this sentiment -- the issue for them was not that the erroneous statements damned the claims, but that a skilled artisan's recognition of this erroneous statement would not have saved the claims.

The Federal Circuit came to almost the opposite outcome in the remand from Lighting Ballast Control LLC v. Philips Electonics North America. That case had an even more complicated history. The District Court had first determined (in part) that the claim term "voltage source means" was governed by 35 U.S.C. § 112, ¶ 6, and was therefore indefinite because the specification did not disclose sufficient structure. Then it reversed itself when deciding a motion for reconsideration because it did not give sufficient weight to the expert testimony about how those skilled in the art would understand the specification. The Federal Circuit disagreed and reversed. This set the stage for the Lighting Ballasten banc decision, in which the Court reaffirmed the de novo standard of review for all claim construction issues. Of course, this decision was short lived in view of the Supreme Court's Teva decision.

Lighting Ballast returned to the Federal Circuit after its prior en banc decision was vacated and remanded. This time, because it could not say that the District Court's factual determinations were clearly erroneous, it affirmed the lower court's determination that the specification provided the requisite structure and that the claims were therefore not indefinite. Even though the outcome was different than the Teva remand, these cases were distinct enough to support such outcomes. In this case, the expert testimony was used to explain what the specification meant. In contrast, the expert testimony in the Teva case was cast as supplementing missing information from the specification -- mainly which molecular weight measurement to use. It therefore didn't matter how a skilled artisan would have interpreted a particular figure or a statement in the prosecution history -- the claim term could have been one of three different possibilities and nothing in the intrinsic record resolved that issue. It will nevertheless be interesting to see how subsequent cases are decided, and whether this decision will stave off the feared use of expert testimony in every claim construction proceeding (see "Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. (2015)"). Somehow, this scenario seems unlikely.

June 24, 2015

Over seven years ago, the Federal Circuit delivered a mixed ruling against Pfizer in litigation against Teva) relating to the pain medication Celebrex® (celocoxib) (where "celocoxib" is 4-[5-(4-methylphenyl)-3-(trifluoromethyl)-1H-pyrazol-1-yl]benzenesulfonamide). In that case, Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2008), the Court upheld a District Court determination that Teva was liable for infringing a trio of Pfizer patents (U.S. Patent Nos. 5,466,823; 5,563,165; and 5,760,068) but reversed the District Court's determination that the claims of the '068 patent were not invalid for obviousness-type double patenting. Pfizer took steps to remedy the deficiency of the claims of the '068 patent by reissue, but those efforts were deemed insufficient in a decision handed down today in G.D. Searle LLC v. Lupin Pharmaceuticals Inc. et al.

This case involved ANDA litigation against five generic defendants (Lupin, Teva Pharmaceuticals USA Inc., Mylan Pharmaceuticals Inc., Watson Laboratories, Inc., Apotex Inc. and Apotex Corp.), again related to generic Celebrex. The basis for the Court's earlier determination that the '068 patent was invalid for obviousness-type double patenting was that the designation of this patent as a "continuation-in-part" was not merely semantic but had substantive repercussions regarding whether the '068 claims were entitled to the "safe harbor" provisions of 35 U.S.C. § 121. These provisions entitle a divisional application filed as the result of a restriction requirement (a Patent Office determination that an applicant has filed claims directed to more than one invention) to be exempt from obviousness-type double patenting, and illustrate Congressional intent (from the legislative history of the 1952 Patent Act) to prevent the unfairness of forcing an applicant to be required to file a divisional application based on claiming "independent inventions" through restriction while permitting the original application to be used as "prior art" in a obviousness-type double patenting rejection. The Federal Circuit considered it also Congress's intent to restrict the safe harbor to divisional applications (which have an identical specification to the originally-filed application) and keep any claims in such a divisional application strictly within the bounds of what had been determined to be a separate invention. This meant, for example, that an applicant would not be able to include claims in a divisional that were within the scope of any claims previously elected for examination. In this way applicants would be precluded from inequitably increasing patent term while not being penalized for electing one invention and pursuing additional inventions in divisional applications.

The lineage of the '068 patent began with U.S. patent application No. 08/160,594 in which the U.S. Patent and Trademark Office imposed a three-way restriction requirement: to the claimed compounds per se, compositions of said compounds and methods of use for treating inflammation and resulting pain without the side effects of conventional non-steroidal anti-inflammatory compounds. The compound claims were elected and granted as U.S. Patent No. 5,466,823 and the composition claims pursued in a divisional application (Serial No. 08/457,059) that issued as U.S. Patent No. 5,563,165. Both the '823 and '165 patents have expired.

Pfizer did not pursue the method of treatment claims in a divisional application but instead filed a continuation-in-part application that contained additional disclosure (including previously undisclosed compounds) as well as claims to the three classes of inventions that were subject to restriction in the '594 application. The U.S. application issued as U.S. Patent No. 5,521,207 and is also expired. However, this application was the priority document for a PCT (International) Application that entered the national phase in the U.S. as Serial No. 08/648,113. In that application the PTO imposed a unity of invention/restriction requirement along exactly the same lines as in the '594 application, requiring the applicant to choose between claims to the compounds, compositions, and method of treatment claims. Pfizer chose to pursue the method of treatment claims and these claims ultimately granted in the '068 patent.

In the earlier litigation, the Federal Circuit found that the claims of the '068 patent did not fall within the safe harbor because it was a continuation-in-part application, not a divisional. Such a "CIP" application by definition contains some of the disclosure of an earlier-filed application in addition to new disclosure. Because of this distinction, the Federal Circuit found that CIP applications could not fall within the safe harbor because they could encompass additional information (and patentable inventions) that were not a part of the original, restricted claims.

After receiving this decision, Pfizer filed reissue application No. 12/205,319 under 35 U.S.C. § 251 seeking to amend the '068 patent to conform to the requirements for a divisional application. According to the panel decision today, in its reissue declaration "Pfizer asserted that it had erred in prosecuting the application leading up to the '068 patent as a continuation-in-part, rather than as a divisional application, and that the error had resulted in invalidating the relevant claims of the '068 patent for obviousness-type double patenting." Pfizer filed a preliminary amendment wherein:

(1) it deleted portions of the '068 patent specification that were not present in the '594 application; (2) it designated the '113 application as a divisional of the '594 application and removed the priority claim to the '629 application; (3) it amended claim 1 to be a method claim using only the compounds originally disclosed in the '594 application; (4) it canceled claims 2-12, which were method claims using compounds that were not present in the '594 application; (5) it canceled claim 18 (reciting a method of preventing colorectal cancer), which was not found in the '594 application; and (6) it added new method claims 19-23, which recited the use of the method disclosed in claim 1 to treat five specific types of inflammation-associated disorders.

Initially the PTO rejected the reissue application on the grounds that these changes were not the types of error intended to be remedied by reissue; in response Pfizer amended its amendment to assert "various technical errors" that Pfizer contended rendered the claims indefinite, and on that basis the reissue application was permitted to continue. Pfizer then made the changes in the original version of the application and the application granted as RE44,048.

The District Court held that these corrections were not correctable under the reissue statute, and that the claims in the '048 reissue patent were not entitled to the safe harbor under 35 U.S.C. § 121 and thus were invalid for obviousness-type double patenting.

The Federal Circuit affirmed, in an opinion by Judge Bryson joined by Chief Judge Prost and Judge Hughes. The opinion recognized the question of the propriety of the reissue application under § 251 but was content to limit the decision to the absence of the safe harbor under § 121 for the reissue claims. The panel expressly rejected Pfizer's argument that the restriction requirement from the '594 application extended to the national phase of the PCT application, despite the similarities in the nature of three classes of claims in each. The panel reasoned that this cannot be the case because the national phase '113 application contained new matter not contained in the '594 application and thus was properly treated as a continuation-in-part (the earlier case had expressly held that CIPs were not entitled to the safe harbor provisions of § 121). In this regard the panel rejected the changes in the reissue application, stating that "[s]imply deleting that new matter from the reissue patent does not retroactively alter the nature of the '113 application."

The opinion also raises the equities (between Pfizer and the public) involved:

Moreover, when the '113 application issued as the '068 patent in June 1998, Pfizer obtained patent protection for the new matter that was not present in the '594 application. For years thereafter, the public was not free to practice that new matter (e.g., the now cancelled claims 2-12 and 18 of the '068 patent) because of that patent protection. Pfizer cannot now identify the '113 application as a divisional of the '594 application (for purposes of section 121) and retroactively relinquish the new matter in the '113 application, after having enjoyed years of patent protection for it. See In re Harita, 847 F.2d 801, 809 (Fed. Cir. 1988) ("In any given case, the [reissue] statute should be so applied to the facts that justice will be done both to the patentee and the public."); see also Inre Serenkin, 479 F.3d 1359, 1362 (Fed. Cir. 2007) ("[Section] 251 is based on fundamental principles of equity and fairness[.]"). Fairness to the public does not permit Pfizer to convert the '113 application into a division of the original '594 application, and thereby take advantage of the safe harbor provision, simply by designating it as a divisional application years after the fact.

(This rationale also applies to the foreign patents arising from the PCT application, whose status has not changed.)

The opinion also sets forth as a basis for its decision its determination that the restriction requirement in the '113 application is not the same as the restriction requirement in the '594 application (despite their similarities). The panel states that the claims in divisional applications must be "derived from the same restriction requirement," citing its earlier opinion regarding this patent family and also Boehringer Ingelheim Int'l GmbH v. Barr Labs., Inc., 592 F.3d 1340, 1354 (Fed. Cir. 2010), stating:

When separate restriction requirements are imposed on separate applications and the record does not show that any of the various restriction requirements carried forward from one application to the next, the earlier restriction requirement cannot be viewed as having continued in effect with respect to the later-filed application [citing Bristol-Myers Squibb Co. v. Pharmachemie B.V., 361 F.3d 1343, 1349-50 (Fed. Cir. 2004)].

The record here was that there were two separate restriction requirements asserted in two related but distinct (regarding the disclosure in the specification and the subject matter of the claims) applications, and that these differences precluded the restriction requirement imposed in the '594 application from having "carried over" to the '113 application (and the panel noted there was no evidence that the '113 application examiner referenced or was even aware of the restriction in the '594 application). And the Court expressly rejected Pfizer's "but for" argument with regard to the requirement imposed in the '594 application (that "but for" that restriction the method of treatment claims would have been prosecuted in the '594 application).

While this decision is entirely consistent with the Court's earlier Pfizer decision, it does illustrate how stringently the Court has and intends to apply the law of obviousness-type double patenting for pharmaceutical patents.

June 23, 2015

Since late last year, the main theme of many 35 U.S.C. § 101 disputes has been whether claims under review are more like those in Ultramercial Inc. v. Hulu LLC or DDR Holdings, LLC v. Hotels.com. In the former case, the Federal Circuit held that claiming a disembodied method that merely uses general-purpose technology (i.e., the Internet) fails to meet the requirements of § 101, while in later case the Court stated that claims that are necessarily rooted in computer technology (e.g., one that changes the technology itself rather than just using it) are patent-eligible. Patentees attempt to draw analogies between their claims and those of DDR, while defendants attempt the same with those of Ultramercial.

At first blush, this case seems to restrict the scope of the DDR decision, which would be bad news for patentees. Upon further review, however, the facts of this case are distinguishable from those of DDR.

Internet Patents Corporation (IPC) filed infringement suits against The General Automobile Insurance Services, Inc., Active Network, Inc., Tree.com, and QuinStreet, Inc., alleging infringement of U.S. Patent No. 7,707,505. The District Court for the Northern District of California dismissed the complaint on the ground of patent ineligibility under § 101. IPC appealed. While the appeal was pending, the Supreme Court decided Alice Corp. v. CLS Bank International, which changed the § 101 analysis. After supplemental briefing to address Alice, the Federal Circuit panel of Judges Newman, Moore, and Reyna affirmed.

Claim 1 of the '505 patent recites:

1. A method of providing an intelligent user interface to an online application comprising the steps of: furnishing a plurality of icons on a web page displayed to a user of a web browser, wherein each of said icons is a hyperlink to a dynamically generated online application form set, and wherein said web browser comprises Back and Forward navigation functionalities; displaying said dynamically generated online application form set in response to the activation of said hyperlink, wherein said dynamically generated online application form set comprises a state determined by at least one user input; and maintaining said state upon the activation of another of said icons, wherein said maintaining allows use of said Back and Forward navigation functionalities without loss of said state.

In a nutshell, the claimed invention is directed to a web browser that stores state representing what a user has typed into a web-based form, even if that information has not yet been submitted. Then, if the user navigates away from and back to the web-based form, the stored state is usable in the form. In this way, the user does not have to retype the information.

The District Court stated that the '505 patent claimed the abstract idea of "retaining information lost in the navigation of online forms," but failed to include "elements or combination of elements, sometimes referred to as the inventive concept, sufficient to ensure that the patent in practice amounts to significantly more than a patent upon [the abstract idea]."

On appeal, IPC argued that various limitations, such as "maintaining said state upon the activation of another of said icons, wherein said maintaining allows use of said Back and Forward navigation functionalities without loss of said state" lifted the claim above the level of a mere abstract idea and was a technical advance over the prior art.

The Court began its analysis with a general discussion of § 101, with particular emphasis on the now familiar Alice test. Judge Newman, writing for the unanimous Court, noted that "[u]nder step one of Mayo/Alice, the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter." This is a welcome statement, as defendants and the U.S. Patent and Trademark Office often examine claims at a 30,000-foot level when carrying out this step, ignoring claim elements in the process.

With respect to the second step of Alice, Judge Newman indicated that "[d]etermination of what is an inventive concept favors inquiries analogous to those undertaken for determination of patentable invention . . . a known idea, or one that is routine and conventional, is not inventive in patent terms." She further wrote that "[o]ther precedent illustrates that pragmatic analysis of §101 is facilitated by considerations analogous to those of §§102 and 103." Once again, the barrier between patent-eligibility, novelty, and non-obviousness is characterized to resemble Swiss cheese.

Thus, Judge Newman focused on what the specification of the '505 patent discloses regarding claim elements that were new and those encompassed by the prior art. Particularly, the '505 patent states that "the end result of 'maintaining the state' is described as the innovation over the prior art, and the essential, 'most important aspect'" thereof. On the other hand, the '505 patent describes the "browser Back and Forward button functionality" as "conventional," "well-known," and "common."

In particular, Judge Newman was influenced by the fact that "claim 1 contains no restriction on how the result is accomplished," and "[t]he mechanism for maintaining the state is not described, although this is stated to be the essential innovation." Thus, in her opinion, "IPC's proposed interpretation of 'maintaining state' describes the effect or result dissociated from any method by which maintaining the state is accomplished upon the activation of an icon." As a result, the Court ruled the claims to be patent-ineligible.

Not unlike DDR, which claimed an improvement to a web server that fundamentally changed how the server operated, the claims at issue here describe an improvement to a web browser that changed how the browser operated (though not fundamentally). However, the DDR patent described its key improvement in great detail, but the '505 patent did not.

When writing a patent's specification, the draftsperson should focus on the clever parts -- aspects of the invention that are new. In most cases, however, the draftsperson is not fully aware of which features are truly new versus those that are in or suggested by the prior art. As a result, it is challenging to identify which of these features might be a candidate "inventive concept" and to pontificate thereon accordingly. The general rule that many of us follow post-Alice is to draft rich, detailed, technical specifications, and undoubtedly we will double-down on that approach in light of this decision.

Under a more rational regime, IPC's claims might have been found patent-eligible -- after all they do improve the operation of a computer and are clearly technical in nature. But the Alice test allows claims to be judged based on a subjective view thereof -- a "gist" of the claim rather than the claim itself. While such an approach was discarded earlier courts, it appears to have raised its ugly head once more.

June 22, 2015

Disaster survivors, and even people who just hear about a disaster, are often first overwhelmed by it; they can only rationally process its significance after some time. During that time they overcome the initial visceral reaction and contemplate the effects the disaster will have on the future (and sometimes, develop remedies to avoid similar disasters in future). Such is a reasonable reaction to the Federal Circuit's decision on June 12th in the Ariosa v. Sequenom case.

To recap, the technology at issue is non-invasive prenatal diagnosis of sex determination, blood typing, other genetic disorders (including Downs Syndrome) and detection of pre-eclampsia, using a simple blood test that reduces or eliminates the need for amniocentesis and chorionic villus sampling (which incur risks to both mother and child). Sequenom Inc. is the exclusive licensee of U.S. Patent No. 6,258,540 originally obtained by Isis Inc.; three independent claims were attacked by Ariosa in a declaratory judgment action and asserted by Sequenom in its patent infringement counterclaims:

1. A method for detecting a paternally inherited nucleic acid of fetal origin performed on a maternal serum or plasma sample from a pregnant female, which method comprises amplifying a paternally inherited nucleic acid from the serum or plasma sample and detecting the presence of a paternally inherited nucleic acid of fetal origin in the sample.

24. A method for detecting a paternally inherited nucleic acid on a maternal blood sample, which method comprises: removing all or substantially all nucleated and anucleated cell populations from the blood sample, amplifying a paternally inherited nucleic acid from the remaining fluid and subjecting the amplified nucleic acid to a test for the Paternally [sic] inherited fetal nucleic acid.

25. A method for performing a prenatal diagnosis on a maternal blood sample, which method comprises obtaining a non-cellular fraction of the blood sample amplifying a paternally inherited nucleic acid from the non-cellular fraction and performing nucleic acid analysis on the amplified nucleic acid to detect paternally inherited fetal nucleic acid.

Ariosa (and co-declaratory judgment plaintiffs Natera Inc. and Diagnostic Center, Inc.) filed a declaratory judgment action against Sequenom on these claims, and the District Court denied Sequenom's motion for preliminary injunction (in July 2012), based on a substantial question of invalidity under Section 101 (this was before the Supreme Court's Myriad decision, and under prevailing Federal Circuit law where both genomic and cDNA was patent eligible). The Federal Circuit then vacated the District Court's denial of Sequenom's preliminary injunction motion for reconsideration under the Myriad decision.

On remand, the District Court granted Ariosa's summary judgment motion for invalidity on the grounds that the claims were patent ineligible (and denied Sequenom's cross-motion for summary judgment of infringement). Ariosa's argument was simple: the claims at issue did not "add enough" to a natural phenomenon (the existence of paternally derived cell-free fetal DNA in maternal blood) to render the claims patent eligible. Because the additional limitations "either apply well-understood, routine, and conventional activity to the natural phenomenon or limit the natural phenomenon to specific types of the natural phenomenon, which are also unpatentable" the claims do not recited patent eligible subject matter according to Ariosa.

The District Court agreed, providing as its analysis that cffDNA was a natural product that was itself patent ineligible, and that amplifying and detecting DNA from plasma or serum was well known at the time the invention was made, based on "evidence" in the specification. (This interpretation seems to be a misreading of the specification, which states that amplification was achieved using standard techniques, not that amplifying DNA from plasma or serum was itself a standard technique.) The prosecution history was cited for the same point with regard to methods for detecting cffDNA, and Sequenom's expert "acknowledged that others before the inventors had amplified and detected nucleic acid in plasma or serum." The District Court based its decision on a combination of the AMP v. Myriad and Parker v. Flook decisions, concluding that to be patent eligible, Sequenom needed to invent novel ways of detecting cffDNA ("[s]imilarly, had the inventors of the '540 patent created an innovative method of performing DNA detection while searching for paternally inherited cffDNA, such as a new method of amplification or fractionation, those claims would be patentable"), based on dicta from the Myriad case.

Taking its turn, the Federal Circuit first provided its understanding of the proceedings below, in an opinion by Judge Reyna joined by Judge Wallach with Judge Linn concurring. According to the opinion, the Court appreciated that the inventors had found cell-free fetal DNA (cffDNA) in maternal plasma or serum "that other researchers had previously discarded as medical waste" (emphasis added). Foreshadowing their reasoning, the panel then state that "[a]pplying a combination of known laboratory techniques to their discovery, Drs. Lo and Wainscoat implemented a method for detecting the small fraction of paternally inherited cffDNA in maternal plasma or serum to determine fetal characteristics, such as gender" (by which the opinion avoids the more significant uses such as detecting Downs syndrome and other fetal genetic defects). And more foreshadowing occurs when they characterize the development of this test as being a "discovery."

The opinion then acknowledges through the parties that the claims are not directed to cffDNA per se or paternally inherited species thereof. In language that parallels Justice Thomas's language in Section III of his Myriad opinion, the opinion states that the '540 patent claims methods of using cffDNA and then sets forth the panel's understanding of the technical basis for the claimed methods and the procedural particulars of the case below.

The panel's analysis is best understood using the Court's own language, to better appreciate the basis for this decision:

In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___, 132 S. Ct. 1289 (2012), the Supreme Court set forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, we determine whether the claims at issue are directed to a patent-ineligible concept. Id. at 1297. If the answer is yes, then we next consider the elements of each claim both individually and "as an ordered combination" to determine whether additional elements "transform the nature of the claim" into a patent-eligible application. Id. at 1298. The Supreme Court has described the second step of this analysis as a search for an "inventive concept" -- i.e., an element or combination of elements that is "sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself." Id. at 1294; see also Digitech Image Techs., LLC v. Elecs. For Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir. 2014) ("Without additional limitations, a process that employs mathematical algorithms to manipulate existing information to generate additional information is not patent eligible.").

It is undisputed that the existence of cffDNA in maternal blood is a natural phenomenon. Sequenom does not contend that Drs. Lo and Wainscoat created or altered any of the genetic information encoded in the cffDNA, and it is undisputed that the location of the nucleic acids existed in nature before Drs. Lo and Wainscoat found them. The method ends with paternally inherited cffDNA, which is also a natural phenomenon. The method therefore begins and ends with a natural phenomenon. Thus, the claims are directed to matter that is naturally occurring.

Of course, what the claimed methods end with are amplified cffDNA and the diagnostic information that is discerned (but not claimed) using the method.

The opinion then takes isolated statements from the specification to support this conclusion (again, stating that cffDNA was "routinely" discarded) and that the inventors surprisingly found that detecting cffDNA could be used to render clinical diagnoses of fetal abnormalities non-invasively.

Of course, it is but a short analytical leap to find that the detection methods were simply "routine, conventional and well-understood" because the panel does not consider the claim as a whole but has broken its analysis into pieces (contrary to Supreme Court's Diamond v. Diehr decision). Accordingly, the panel determines that there is no "inventive concept" in the claims (bizarrely, relying as did the District Court on Parker v. Flook). (The applicability of that decision on life science inventions should have been firmly put to bed in Judge Rich's In re Bergy decision.) The next portion of the opinion nicely sets out the logical and legal flaws in the panel's decision:

Like the patentee in Mayo, Sequenom contends that the claimed methods are patent eligible applications of a natural phenomenon, specifically a method for detecting paternally inherited cffDNA. Using methods like PCR to amplify and detect cffDNA was well-understood, routine, and conventional activity in 1997. The method at issue here amounts to a general instruction to doctors to apply routine, conventional techniques when seeking to detect cffDNA. Because the method steps were well-understood, conventional and routine, the method of detecting paternally inherited cffDNA is not new and useful. The only subject matter new and useful as of the date of the application was the discovery of the presence of cffDNA in maternal plasma or serum.

Unlike the patentee in Mayo, the inventors of the claimed invention here did something not done before their invention (detecting cffDNA in maternal blood). In contrast, every step in the methods claimed in Mayo had been performed in the prior art; the only inventive aspect in those claims was the therapeutic ratio, which the Court found to be a "natural law." Accordingly, the Mayo claims did nothing more than recite the natural law. That is not the case here. Tragically, the remainder of this portion of the opinion recites the tedious evidence from the specification regarding known amplification and detection methods while ignoring that these methods had never been used to detect cffDNA in maternal blood.

The opinion then visits preemption (sadly, the Circuit Court responsible for interpreting patent law does not correctly state the standard, i.e., undue preemption; after all, all claims are preemptive in nature). Fortunately, the panel does not follow the District Court through the looking glass of requiring for patent eligibility that every newly claimed method to recite not only a new method but that there be commercially viable, non-infringing alternatives available at the time an application is filed. Instead, the Court considers the preemption question moot once claims have been determined to be patent ineligible.

Finally, the Court insulates itself from the negative consequences its decision has on innovation by citing language (dicta) in Myriad that "[g]roundbreaking, innovative, or even brilliant discovery does not by itself satisfy the § 101 inquiry," illustrated by the interpretation that "[t]he discovery of the BRCA1 and BRCA2 genes was a significant contribution to the medical field, but it was not patentable" (ignoring the fact acknowledged twelve pages prior in the opinion that the inventors were not claiming cffDNA).

Judge Linn's concurring opinion (which in a rational world would be a dissent) joins "only because [he is] bound by the sweeping language of the test set out in Mayo Collaborative Services v. Prometheus Laboratories, Inc. And he recognizes the consequences: "[t]his case represents the consequence -- perhaps unintended -- of that broad language in excluding a meritorious invention from the patent protection it deserves and should have been entitled to retain." His soi-disant concurrence then sets out four ways to distinguish the case at bar from Mayo (although he does not avail himself of any of these grounds as a basis to dissent). He states:

The Supreme Court's blanket dismissal of conventional post-solution steps leaves no room to distinguish Mayo from this case, even though here no one was amplifying and detecting paternally-inherited cffDNA using the plasma or serum of pregnant mothers. Indeed, the maternal plasma used to be "routinely discarded," '540 patent col.1 ll.50–53, because, as Dr. Evans testified, "nobody thought that fetal cell-free DNA would be present."

(Perhaps one basis for courts' seeming difficulty in applying Diehr properly is reliance on phrases like "conventional post-solution activity" from Flook; while this may make sense in claims to an alarm limit it is difficult to see how the methods steps recited in Sequenom's claims are properly characterized as such. Cf, In re Bergy). He then recites a list of what can only be considered to be secondary considerations (taking the Supreme Court's lead, incorporating concepts of obviousness into the patent-eligibility analysis) to establish how "groundbreaking" the claimed methods were. And he states:

Unlike in Mayo, the '540 patent claims a new method that should be patent eligible. While the instructions in the claims at issue in Mayo had been widely used by doctors -- they had been measuring metabolites and recalculating dosages based on toxicity/inefficacy limits for years -- here, the amplification and detection of cffDNA had never before been done. The new use of the previously discarded maternal plasma to achieve such an advantageous result is deserving of patent protection.

But while he says he sees no reason "in policy or statute" why these claims are not patent eligible, he believes he is bound by "the sweeping language in the Supreme Court's Mayo opinion" to concur.

It is clear that the Federal Circuit (or at least the members of this panel) believe that they are operating under a mandate from the Supreme Court regarding patent eligibility. On the contrary, the Court itself has on many occasions made it clear that they view their role (in patent law and otherwise) as setting forth the broad contours of the law that they expect the inferior courts to use to develop the law properly. In view of the lack of clarity in the Mayo opinion, a third year law student could distinguish this case from that one in arriving at the correct conclusion of patent eligibility. Nothing more than Supreme Court precedent itself (specifically, the Diamond v. Diehr decision which the Court did not overturn in Mayo) is needed for the task. The issue is not a lack of analytical and doctrinal tools but the will to employ them, which these members of the Federal Circuit do not seem to have had in rendering this decision. But shielding the Court from the consequences of their bad decisions does them a disservice. If the Court intended to exclude from patent eligibility all genetic (nay all types of) diagnostic methods, the Federal Circuit owes it to the Court to give them the opportunity to say so clearly and reap the political consequences.

Sequenom must now contemplate whether to seek en banc review (which is unlikely given the current composition of the Court, and equally fraught with risk for that same reason) or to petition for certiorari. It is likely that the only way the Court will recognize the significance of this decision will be if that petition is widely and broadly supported by amici from industry, academia and the public through those patient groups who understand that failing to patent such tests today will lead inexorably to a future where all testing is proprietary and testing costs never decrease. This is surely not what the Court had in mind when deciding Mayo; they deserve the opportunity to clarify the boundaries of patent eligibility with more care.

June 21, 2015

In 2006, Akamai Technologies ("Akamai") sued Limelight Networks, Inc. ("Limelight") in the U.S. District Court for the District of Massachusetts, alleging infringement of U.S. Patent No. 6,108,703. The '703 patent is assigned to the Massachusetts Institute of Technology ("MIT") and is exclusively licensed to Akamai.

Claim 34 of the '703 patent recites:

A content delivery method, comprising: distributing a set of page objects across a network of content servers managed by a domain other than a content provider domain, wherein the network of content servers are organized into a set of regions;for a given page normally served from the content provider domain, tagging at least some of the embedded objects of the page so that requests for the objects resolve to the domain instead of the content provider domain; in response to a client request for an embedded object of the pagel; resolving the client request as a function of a location of the client machine making the request and current Internet traffic conditions to identify a given region; and returning to the client an IP address of a given one of the content servers within the given region that is likely to host the embedded object and that is not overloaded. [Emphasis added.]

The claimed invention is directed to delivering electronic data using a content delivery network (CDN). It purports to facilitate faster delivery of the data by separating the content of a website onto multiple servers. The content that requires greater network capacity (such as photos and videos) can be assigned to servers ("tagged") that provide this content at faster speeds. The remaining content can be provided by non-specialized servers.

Limelight operates a CDN, and content providers are its customers. Limelight carries out three of the four claimed steps (the distributing, resolving, and returning), but did not tag components of its customers' websites -- instead, Limelight contractually required its customers to do their own tagging, if those customers wanted to exploit the faster servers. The relevant language of the contract stated "Customer [i.e., content provider] shall be responsible for identifying via the then current [Limelight] process all [URLs] of the Customer Content to enable such Customer Content to be delivered by [Limelight]," and "Customer shall provide [Limelight] with all cooperation and information necessary for [Limelight] to implement the [Content Delivery Service]."

At trial, the jury found that Limelight and its customers jointly and directly infringed '703 patent under 35 U.S.C. § 271(a), and awarded $40 million in damages. Following this verdict, the Federal Circuit decided Muniauction, Inc. v. Thomson Corp. In Muniauction, the Court held that direct infringement of a claimed method requires that a single entity perform every step of the claim (the "single entity rule"). But, this requirement is satisfied if steps are performed by multiple parties provided that a single defendant exercises "control or direction" over entire process. Thus, neither party is liable for infringement if they perform all of the steps, but merely engage in an arms-length relationship to do so.

Limelight moved for judgment of non-infringement as a matter of law (JMOL) in view of Muniauction, and the District Court granted the motion, holding that because (i) no single entity performed all of the claimed steps, and (ii) the contractual relationship between Limelight and its customers did not rise to the level of "control or direction" there was no liability. On appeal, a Federal Circuit panel affirmed, but the en banc Court heard the case, reversed, and remanded the case for further proceedings. Particularly, the en banc majority reasoned that Limelight and its customers did not directly infringe, but "the evidence could support a judgment in its favor on a theory of induced infringement [under 35 U.S.C. § 271(b)]" because "inducement does not require that the induced party be an agent of the inducer or be acting under the inducer's direction or control." The Court, however, also stated that "there can be no indirect infringement without direct infringement."

In a June 2014 appeal, the Supreme Court took issue with this apparent contradiction, and held that a defendant is not liable for inducing infringement under 35 U.S.C. § 271(b) when no one party has directly infringed the patent under § 271(a) (see "Limelight Networks, Inc. v. Akamai Technologies, Inc. (2014)"). Thus, the high court reversed the Federal Circuit finding that Limelight had infringed the '703 patent. On remand, the Federal Circuit considered whether Limelight has infringed under § 271(a). Judge Linn authored the opinion of the court, and was joined by Chief Judge Prost. Judge Moore dissented.

2. The Outcome

Ultimately, the majority ruled that "because Limelight . . . did not perform all of the steps of the asserted method claims . . . and because the record contains no basis on which to impose liability on Limelight for the actions of its customers who carried out the other steps, Limelight has not directly infringed the '703 patent under § 271(a)." The majority confirmed that "direct infringement liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to a single entity -- as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise." Here, there was no liability "[b]ecause this case involves neither agency nor contract nor joint enterprise."

In dissent, Judge Moore disagreed. She believes that "§ 271(a) includes joint tortfeasor liability." Characterizing the majority's rule as creating "a gaping hole in what for centuries has been recognized as an actionable form of infringement," she opined that the single entity rule "is a recent judicial creation inconsistent with statute, common law, and common sense."

Instead, the majority found that "[e]ncouraging or instructing others to perform an act is not the same as performing the act oneself and does not result in direct infringement [as] § 271 has separate subsections addressing induced and contributory infringement." In coming to this conclusion, the majority relied heavily on the structure of § 271, noting that "[w]hen a party participates in or encourages infringement but does not directly infringe a patent, the normal recourse under the law is for the court to apply the standards for liability under indirect infringement." But, "indirect infringement requires, as a predicate, a finding that some party is directly liable for the entire act of direct infringement."

Akamai attempted to argue that "an accused infringer 'directs or controls' a third party if the accused infringer goes beyond loosely providing instructions and specifically tells a third party the step or steps to perform." The majority disagreed based on the organization and legislative history of the statute. Notably, "§ 271(a) includes only the principles of vicarious liability, as embodied in the single entity rule." Despite being presented with "numerous conflicting theories of joint liability that existed in the common law prior to 1952, Congress enacted specific rules for inducement and contributory liability in § 271(b) and (c), respectively." The majority also explained its disagreement with the dissent's argument -- "[w]hile the dissent believes this leaves a 'gaping hole,' it is not our position to legislate or contravene Congress' choice -- right or wrong -- by importing other theories of joint liability into § 271(a)." Particularly, "the dissent advocates holding a customer jointly and severally liable for patent infringement based on its performance of a single step of a claimed method, even when it has no knowledge of the patent."

3. The Majority's Reasoning

The majority carried out its substantive analysis of the case in three steps. First, in reviewing the statutory scheme of § 271, the majority pointed out that patent infringement is not a creation of common law but a tort defined by statute. While § 271(a) is "a declaration of what constitutes infringement," subsections (b) and (c) codify the doctrines of inducement and contributory infringement respectively. The Court states that "in this way, Congress carefully crafted subsection (b) and (c) to expressly define the only ways in which individuals not completing an infringing act under § 271(a) could nevertheless be liable." And "[t]he fact that Congress chose to impose some forms of secondary liability, but not others, indicates a deliberate congressional choice with which the courts should not interfere."

The majority then addressed the dissent's argument (which was also promulgated by Akamai) that the word "whoever" in § 271(a) is plural and therefore undermines the single entity rule. In the majority's view, despite "whoever" being plural, more than one entity can be independently liable for direct patent infringement if each entity practices every step of the claim. Furthermore, interpreting § 271(a) to include actors who do not independently infringe would make § 271(b) and (c) redundant. In the majority's view, such a construction contravenes the canon against surplusage in statutes.

Second, the majority analyzed divided infringement case law, which is rooted in traditional principles of vicarious liability. This case law sets forth the single entity rule and that "multiple actors could together infringe a patent only if one controlled the other(s)." Particularly, "when a contract mandates the performance of all steps of a claimed method, each party to the contract is responsible for the method steps for which it bargained . . . [h]owever, this type of contractual arrangement will typically not be present in an arms-length seller-customer relationship." Still, "the concerns over a party avoiding infringement by arms-length cooperation can usually be offset by proper claim drafting [because] a patentee can usually structure a claim to capture infringement by a single entity."

Third, the majority found errors in the notion of importing joint tortfeasor liability into § 271(a). It acknowledged that "liability exists under traditional principles of vicarious liability, such as where a mastermind directs or controls another to perform all steps of a claimed method." But, the majority indicated that the dissent departed from the common law limits on joint tortfeasor liability in order to import this law into § 271(a). Particularly, "actors whose innocent actions coordinate to cause harm generally are not subject to liability at common law," but would be under the dissent's interpretation. Further, the common law "requires both parties to know the others' actions to act in concert" such that liability is found. Thus, "when parties act independently for their own benefit, such as in arms-length seller-customer relationships," the necessary concerted action between the parties is missing. Additionally, for liability under § 271(a), the dissent would require the parties to know that their joint conduct would cause damage. This is inconsistent with the statute and the Supreme Court's precedent that "a direct infringer's knowledge or intent is irrelevant."

The majority further indicated that the dissent's reasoning would lead to unexpected results. In one scenario, "a customer who performs a single step of a patented method by merely using a product as intended would . . . liable for direct infringement." Doing so would fill the "gaping hole" left open by divided infringement, but open a much larger door where innocent customers would be liable for patent infringement for their simple actions.

Lastly, the majority pointed out that the dissent's position would conflict with the long established rule that "a dependent claim cannot be infringed unless the independent claim from which it depends is also infringed." Applying this logic a hypothetical set of claims in which an independent claim recites a replicating step and a dependent claim adds a tagging step, "the dissent's rule . . . would result in a party that performs the tagging step but not the replicating step being liable for infringing [the dependent claim] while not being liable for infringing the broader claim from which it depends."

The majority concluded by pointing out that "Limelight's customers decide what content, if any, they choose to have delivered by Limelight's CDN and only then perform the [tagging step]." This "form contract does not obligate Limelight's customers to perform any of the method steps." Based on this interpretation, it was not established that "Limelight's customers were acting as agents of or otherwise contractually obligated to Limelight or that they were acting in a joint enterprise."

4. Conclusion

As the law regarding divided infringement currently stands, it is possible to use a contract between a company and its customer to avoid infringement of a patented method when those parties split carrying out the patented steps. The fact pattern of this case provides a recipe for doing so. As a result, it is more critical than ever that claim drafters focus method claims so that their steps are likely to be carried out by a single entity. For example, Claim 34 of the '703 patent could be written as "for a given page normally served from the content provider domain, obtaining a tagged representation of at least some of the embedded objects of the page . . . ."

Still, this case may not be at an end. The dissent's final argument was that an en banc action is required to do what the majority proposes, as it is at odds with binding precedent from a previous panel. On June 12th, Akamai requested such an en banc review.

June 12, 2015

In its first substantive application of Alice v. CLS Bank in 2015, the Federal Circuit has once again shot down claims for not meeting the patent-eligibility requirements of 35 U.S.C. § 101.

In 2012, OIP sued Amazon in the Northern District of California, alleging infringement of U.S. Patent No. 7,970,713. The District Court granted Amazon's motion for judgment on the pleadings, finding that the '713 patent is not directed to patent-eligible subject matter, as the claims "merely use a general-purpose computer to implement the abstract idea of price optimization." Judges Taranto, Mayer, and Hughes heard the appeal.

Claim 1 of the '713 patent recites:

A method of pricing a product for sale, the method comprising: testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices; wherein said electronic messages include offers of said product; wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers; wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices; wherein the devices are programmed to receive offers for the product based on the offer terms; wherein the devices are not configured to fulfill orders by providing the product; wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages; gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices; using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product; selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price.

In short, the '713 patent claims a computer-implemented method for testing the uptake of various different prices for a product, determining which of these prices resulted in a desirable outcome (e.g., highest number of sales or highest profitability), and then using this price for future sales of the product.

According to the '713 patent, "traditionally merchandisers manually determine prices based on their qualitative knowledge of the items, pricing experience, and other business policies . . . [i]n setting the price of a particular good, the merchandiser estimates the shape of a demand curve for a particular product based on, for example, the good itself, the brand strength, market conditions, seasons, and past sales." But, "the merchandiser is slow to react to changing market conditions, resulting in an imperfect pricing model where the merchandiser often is not charging an optimal price that maximizes profit." A purported advantage of the invention is that it "helps vendors automatically reach better pricing decisions through automatic estimation and measurement of actual demand to select prices."

After noting that § 101 issues are matters of law reviewed de novo, the Federal Circuit set forth the two-prong patent-eligibility test of Alice. The first prong is to determine whether the claims are directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea. If so, the second prong is to determine whether any additional claim elements transform the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.

The Court noted that "[c]laim 1 broadly recites a method of pricing a product for sale," and that "[t]his concept of offer based pricing is similar to other fundamental economic concepts found to be abstract ideas by the Supreme Court and this court." Further, "that the claims do not preempt all price optimization or may be limited to price optimization in the e-commerce setting do not make them any less abstract."

Turning to the second prong, the Court found that, beyond this abstract idea, "the claims merely recite well-understood, routine conventional activities, either by requiring conventional computer activities or routine data-gathering steps." Additionally, the Court indicated that "the claims are exceptionally broad and the computer implementation limitations do little to limit their scope" and that "the specification makes clear that this programming and the related computer hardware refers to any sequence of instructions designed for execution on a computer system." Also swaying the Court's opinion was its belief that "relying on a computer to perform routine tasks more quickly or more accurately is insufficient to render a claim patent eligible."

On this basis, the Court concluded that the claims did not meet the requirements of § 101, and affirmed the District Court.

Judge Mayer wrote separately to reiterate his previously-expressed view (seeI/P Engine, Inc. v. AOL Inc. (Aug 2014) and Ultramercial Inc. v. Hulu LLC (Nov. 2014)) that patent-eligibility should be addressed at the outset of a case, for example, in the pleadings as was done by Amazon. Particularly, he contended that doing so "not only conserves scarce judicial resources and spares litigants the staggering costs associated with discovery and protracted claim construction litigation, it also works to stem the tide of vexatious suits brought by the owners of vague and overbroad business method patents." But then he went on to state that the Supreme Court has instructed that § 101 is to be resolved at the first opportunity.

As we have noted previously, Judge Mayer is taking liberties with his interpretation of the Supreme Court's position. No Supreme Court cases (or Federal Circuit cases for that matter) actually go as far as stating that § 101 determinations must be made early in litigation. These cases may suggest the § 101 inquiry should take place before §§ 102 and 103 examination, but they do not state that this is a requirement.

And for good reason. Unfortunately, the Alice test is often decided on vague notions of whether a claim is "too abstract," "too broad," or whether it resembles those reviewed in Alice and Bilski v. Kappos. Use of this "walks like a duck" criteria allows courts, as well as the Patent and Trademark Office, to strip patentees of their property rights without discovery, claim construction, or determination of ordinary skill in the art. No doubt, Judge Mayer's proposal would reduce the size of courts' dockets, and probably result in some "bad" patents being invalidated. All patents challenged under § 101, however, would be at risk of being thrown out with the bathwater.

June 07, 2015

The Federal Circuit heard oral arguments in the Amgen v. Sandoz case on Wednesday, June 3, 2015. The three judges on the panel were Judge Newman, Judge Lourie, and Judge Chen. This case is on appeal from the U.S. District Court for the Northern District of California, where Judge Seeborg denied Amgen's motion for a partial judgement on the pleadings and for a preliminary injunction.

One of the main issues on appeal was whether the disclosure and patent exchange provisions (the so-called "patent dance") of the Biologics Price Competition and Innovation Act ("BPCIA") is mandatory or whether either party can opt out of the requirements and settle for the remedy specified in the statute. As a reminder, the patent dance kicks off with the disclosure of the biosimilar application, as well as the process of manufacture, by the subsection (k) applicant. The statute at subsection (l)(2) reads:

(2) SUBSECTION (k) APPLICATION INFORMATION.—Not later than 20 days after the Secretary notifies the subsection (k) [biosimilar] applicant that the application has been accepted for review, the subsection (k) applicant— (A) shall provide to the reference product sponsor a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application; and (B) may provide to the reference product sponsor additional information requested by or on behalf of the reference product sponsor. [emphasis added]

42 U.S.C. § 262(l)(2). The panel wasted no time in cutting to the chase, when Judge Lourie interrupted counsel for Amgen almost at the outset, noting "[w]hat you are going to tell us . . . is that 'shall' means 'shall' -- in fact it means 'must.'" This has, of course, been Amgen's position since it was first notified that Sandoz did not intend to participate in this disclosure process.

Sandoz, for its part, has maintained that the use of the term "shall" does not mean that a biosimilar applicant must provide a copy of its application in every instance, but only if it wishes to partake in the benefits of the patent dance. Judge Newman has a different take on that question -- it was not whether to partake in this particular subpart of the BPCIA, but rather whether to partake in the entirety of the BPCIA process -- including the abbreviated approval process:

If you want my data -- if you want to be a (k) applicant, which I gather Sandoz has done, right -- has used the data, hasn't gone through their own clinical trials or all the rest of it -- then this is what you "shall" do. You don't have to use the Amgen data, you can create your own, then you are home free.

While counsel for Sandoz disagreed, Judge Newman continued:

But why isn't it the question -- if you have a statute, this integrated statute, there were -- from the record it looks as if there were extensive hearings, tradeoffs, debates, connections with the pros and cons of Hatch Waxman for biosimilars -- and here we have a complicated statute and you say only some of it counts.

Of course, it is unfortunately not as simple as saying that this is an "integrated statute." Instead, once you start looking at the entirety of the statute, it gets a lot more complicated. As Judge Lourie noted -- the BPCIA should win the "Pulitzer prize for complexity or uncertainty." The patent dance is outlined in subsection (l)(2)-(6) of the statute, whereas subsection (l)(9)(c) purports to provide a remedy should the biosimilar applicant not disclose the requisite information:

If a subsection (k) applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor, but not the subsection (k) applicant, may bring an action under section 2201 of Title 28, for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.

42 U.S.C. § 262(l)(9)(C). Sandoz has maintained that because the remedy is already provided for in the statute, the subsection (k) applicant is free to disregard the seemingly mandatory disclosure provision, provided it is willing to accept the consequences.

Judge Chen clearly struggled with trying to reconcile the statute as a whole. On the one hand, he had one of the most quoted lines of the hearing: "I don't see through the language or the structure of (l) where there's a hint that it's a 'choose-your-own-adventure' situation for the (k) applicant." However, Judge Chen ran that thought to its logical conclusion, noting that even if the provision is determined to be mandatory, you might end up in the same situation -- with the patent infringement remedy outlined by the statute.

To this point, Amgen presented a compelling, yet somewhat buried, response. If § 262(l)(9)(C) were meant to be the exclusive remedy for non-compliance with the disclosure provision, the biosimilar applicant would be put into a much better position than it would have been otherwise. The statute envisions and anticipates patent litigation with regard to methods of manufacturing the biosimilar drug product -- indeed it is one of the specified types of information that must be disclosed by the subsection (k) applicant. However, if the biosimilar applicant refuses to "dance," § 262(l)(9)(C) only allows for a DJ action with respect to patents covering the biological product or the uses thereof (apparently in a nod to the Hatch Waxman statute). And this is to say nothing of the problem that, without the disclosure of the recited information, the reference product sponsor will have difficulty knowing with certainty just which patents are being infringed. With the biosimilar applicant facing such overwhelming incentives, it will likely be the rare situation where it will choose to make the appropriate disclosures and initiate the patent dance.

Part of the problem, as Judge Chen noted, is that there is really nothing tying subsection (l) to subsection (k). Instead, activities involving the FDA fall under subsection (k), while matters involving the resolution of patent infringement claims fall under subsection (l). Congress could have done a better job ensuring that progress of the application before the FDA could not continue (or at least be substantially delayed) unless the subsection (k) applicant participated in the patent dance. Indeed, Amgen was rebuffed when it requested that the FDA require biosimilar applicants to "certify" compliance with the subsection (l) disclosure requirements (see "Amgen Receives No Help from the FDA -- A Biosimilar Update"). A possible solution would be for the Federal Circuit to fashion some remedy that would leave the statute intact, but provide for the ability of district courts to enjoin the FDA if biosimilar applicants are non-compliant.

The other main issue argued before the Court was whether Sandoz's Notice of Commercial Marketing was effective when it was made shortly after the application was accepted, as opposed to making it after the application was approved. The questioning from the three judges seemed to suggest that the statute did not make sense unless the Notice was provided after the latter, or post-approval notice. For example Judge Chen suggested that: "it sounds a little nonsensical to say that that is an appropriate form of Notice of Commercial Marketing when you don't have any clue on whether your application will ever get approved," much less when. He used the term "aspirational" to refer to such notice just after acceptance. Nevertheless, the question was raised by the Court whether setting the "Notice" date after application approval would inappropriately extend the exclusivity period of the reference product sponsor -- at least in situations like this for Amgen.

The Court did ask what remedy Amgen was seeking on appeal. It is important to note that this is a somewhat atypical case, in which Amgen's composition-of-matter patent has already expired, and the data exclusivity period is well beyond the 14 years contemplated by the statute. Nevertheless, everyone appeared to be in agreement that any decision needed to be applicable not only to this case, but to all more "typical" cases that might arise. Amgen asked that it be put back in the position it would have been if Sandoz had complied with the statute at the outset. It also stressed that it did not want a "windfall." However, as for the particulars, it simply asked the Court to rule in Amgen's favor and remand to the District Court to fashion the appropriate remedy.

There was one particularly troubling tangential comment by Judge Newman, at least from the perspective of Hatch Waxman litigation. While discussing the artificial act of infringement related to the BPCIA, or 35 U.S.C. § 271(e)(2)(c)(ii), Judge Newman inquired whether it was correct that the comparable provision for Hatch Waxman, 35 U.S.C. § 271(e)(2)(a), set the act of infringement as the certification pursuant to paragraph IV. Counsel for Amgen correctly noted that the statute only mentions the submission of the ANDA application, and is silent as to the paragraph IV certification. However, this issue has already been addressed by the Federal Circuit in the Astra Zeneca v. Apotex case, where it concluded that, in order to establish subject matter jurisdiction pursuant to § 1338(a), nothing more than alleging infringement by the filing of an ANDA was required (see "AstraZeneca Pharmaceuticals LP v. Apotex Corp. (Fed. Cir. 2012)"). Moreover, almost every jurisdiction that has now considered this question has determined that a paragraph IV certification is not a prerequisite for jurisdiction under 271(e)(2). In fact, at least two jurisdictions that at one point had come to the opposite conclusion (the Northern District of Illinois and the District of New Jersey), have since conformed to this majority position. We can only hope that this case does not include some dicta on the subject that could create uncertainty moving forward.

We will continue to monitor this case for any unusual development, and we will of course report on the outcome of this appeal in due course.

May 25, 2015

In August, 2009, Allvoice sued Microsoft in the Western District of Washington, alleging infringement of its U.S. Patent No. 5,799,273. In December, 2013, the District Court granted Microsoft's motion for summary judgment finding that Microsoft did not infringe the asserted claims, and that claims 60-68 of the patent were invalid under 35 U.S.C. § 101. Allvoice appealed. The Federal Circuit panel of judges Prost, Dyk, and O'Malley heard arguments, and affirmed the District Court.

Of particular interest is the reasoning behind the finding of invalidity in light of the claim language at issue. As a representative claim of those held invalid, claim 60 recites:

A universal speech-recognition interface that enables operative coupling of a speech-recognition engine to at least any one of a plurality of different computer-related applications, the universal speech-recognition interface comprising: input means for receiving speech-recognition data including recognised words; output means for outputting the recognised words into at least any one of the plurality of different computer-related applications to allow processing of the recognised words as input text; and audio playback means for playing audio data associated with the recognised words.

In other words, Allvoice's invention, as recited by claims 60-68, is directed to a form of application programming interface (API) that allows applications running on a computer to receive the output of a speech recognition program and "to link the relationship between the output data and the audio data to allow the audio data to be played back for any output data which has been dictated."

After discussing the parameters of § 101 in a broad sense, the Court focused in on the four statutory categories listed therein (machines, processes, articles of manufacture, and compositions of matter). Rather than analyzing whether the claims fell into one of the judicial exceptions to these categories (e.g., abstract ideas), the Court considered whether the claimed invention even fit into any of the categories at all.

Noting that "subject matter that falls outside the four statutory categories of § 101 . . . is not patent eligible," the Court explained that "except for process claims, the eligible subject matter must exist in some physical or tangible form." For instance, a machine must be "a concrete thing, consisting of parts, or of certain devices and combination of devices," an article of manufacture must be "a tangible article that is given a new form, quality, property, or combination through man-made or artificial means," and a composition of matter "requires the combination of two or more substances and includes all composite articles."

When before the Court, Allvoice explained that the interface recited by claim 60 consisted of software instructions. The Court did not find this point sufficient to result in the claims meeting the requirements of § 101, because while "[s]oftware may be patent eligible . . . when a claim is not directed towards a process, the subject matter must exist in tangible form." Claims 60-68, in the Court's view, were "software instructions without any hardware limitations" and therefore intangible. Allvoice's proposed construction of the claims' means-plus-function limitations did not involve a tangible form either.

Allvoice contended that "software must necessarily be in a machine readable, physical state in order to exist," and therefore is patent-eligible by its very nature. However, citing Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., the Court observed that "instructions, data, or information alone, absent a tangible medium, is not a manufacture," and thus refused to import a tangible medium into Allvoice's claim language.

The four categories of statutory subject matter cover most anything that one can imagine. For computer-implemented inventions, however, claims directed to pure signals or disembodied data are not within the ambit of § 101. This case serves are a reminder to claim drafters that claiming software as anything but a process can be a tricky endeavor. After all, software instructions are indeed just another form of data, and without a medium to be stored on, lack physical structure.

But, this case also begs the question of what Allvoice could have done in order to mitigate this problem. For instance, if the preamble to claim 60 had read "an article of manufacture including a universal speech-recognition interface . . . ," would the outcome be different? Or, would Allvoice's claims be valid if they had been written in Beauregard style, such as "a non-transitory computer readable medium including computer instructions that, when executed by a processor, cause the processor to perform operations of a universal speech-recognition interface . . . ." Deviation from well-known and well-accepted preambles remains risky.

May 19, 2015

The Federal Circuit affirmed a decision by the U.S. District Court for the District of Massachusetts that it lacked subject matter jurisdiction under 35 U.S.C. § 146 pursuant to changes in the statute provided by the Leahy-Smith America Invents Act, in Biogen MA, Inc. v. Japanese Foundation for Cancer Research. Biogen brought suit after receiving an unfavorable PTAB determination in an interference, a proceeding eliminated by other changes in the AIA for patents having an earliest effective filing date after March 15, 2013. At issue here was whether these AIA changes in the scope of appeals applied to interferences instituted after September 15, 2012 under circumstances wherein each party had an earliest effective filing date prior to the effective date of the change from the "first to invent" to "first inventor to file" standard.

This interference (No. 105,939) is one in a line with long provenance in biotechnology patent law, being related to the three-way interference that resulted in the Federal Circuit decision in Fiers v. Revel (v. Sugano, the latter inventor having been granted priority to claims for isolated human β-interferon DNA). That case stands for the proposition that conception of an invention comprising an isolated nucleic acid molecule requires that the molecule actually be isolated. It is a decision that directly supports the further development of the Federal Circuit's written description jurisprudence, from Regents of the University of California v. Eli Lilly & Co. through Ariad v. Eli Lilly.

In the case at bar, the PTAB held that one of the inventors, Walter Fiers, was estopped by losses in two earlier interferences "covering the same subject matter" (the opinion notes that the '939 interference was directed to β-interferon protein). The District Court determined that the AIA eliminated district court jurisdiction for appeals of PTAB decisions in interferences, and transferred the case to the Federal Circuit (which undoubtedly has jurisdiction under 35 U.S.C. § 141). The Federal Circuit panel affirmed the District Court on the procedural question and the PTAB on the substantive question regarding interference estoppel, in a decision by Judge Dyk joined by Judges Schall and Chen.

Regarding the procedural issue, the panel decided the "threshold issue" of whether the Federal Circuit had jurisdiction to decide whether the District Court had properly decided that it did not have jurisdiction (a decision that the Japanese Foundation contended was not reviewable). The Federal Circuit held that the District Court's decision was reviewable, citing In re Teles AG Informationstechnologien, 747 F.3d 1357 (Fed. Cir. 2014). That case was one "virtually indistinguishable" from this one, but there the Court did not "explicitly discuss the basis for adjudicating the district court's jurisdiction" so the panel set forth its grounds in this opinion. The opinion relied on its own "'inherent jurisdiction to determine [its] own jurisdiction,'" citing C.R. Bard, Inc. v. Schwartz, 716 F.2d 874, 877 (Fed. Cir. 1983) (citing United States v. United Mine Workers of Am., 330 U.S. 258 (1947)), and noted that Congress had "provided two mutually exclusive avenues of review [of adverse interference decisions] under § 146 and § 141." This proposition finds support not only in the Court's own jurisprudence (including AbbVie Deutschland GmbH v. Janssen Biotech, Inc., 759 F.3d 1285, 1296 (Fed. Cir. 2014)), but more importantly under controlling Supreme Court precedent. Hoover Co. v. Coe, 325 U.S. 79, 84-85 (1945) (regarding an earlier version of the Patent Act having similar alternate provisions, wherein the Court "thoroughly reviewed the legislative history of the patent acts since 1836, which revealed continued maintenance of alternative paths of review"). The opinion notes that these procedural alternatives have been upheld "uniform[ly]" by appellate courts and that choosing one option constitutes an "irrevocable election." In such an "either/or" situation, the question of whether the Court can properly exercise jurisdiction depends on whether the District Court was correct in determining that it did not have jurisdiction, contrary to the Foundation's position.

The panel determined that the AIA stripped district courts of their jurisdiction over adverse interference decisions. In reaching its decision, that Court reviewed the provisions of the AIA to understand whether the new law changed availability of § 146 challenge of patent decisions for interferences declared after September 15, 2012 (one year after enactment of the law and the time when changes in other provisions of the law, such as the change from inter partes re-examination to inter partes review became effective). The opinion does not rely solely on the AIA, however, but also considered revisions to the AIA enacted by the Leahy-Smith America Invents Technical Corrections Act, Pub. L. No. 112– 274, 126 Stat. 2456 (2013). In part this was necessary because the panel found the "effective date" provisions to be "far from a model of clarity," containing a "hodgepodge" of "express" and "implicit reservations" of pre-AIA provisions "and sometimes simply silence." With this backdrop, the opinion focuses on the parties' contentions regarding the meaning of § 3(n)(1) of the AIA:

(1) IN GENERAL.—Except as otherwise provided in this section, the amendments made by this section shall take effect upon the expiration of the 18-month period beginning on the date of the enactment of this Act [i.e., March 16, 2013], and shall apply to any application for patent, and to any patent issuing thereon, that contains or contained at any time— (A) a claim to a claimed invention that has an effective filing date as defined in section 100(i) of title 35, United States Code, that is on or after the effective date described in this paragraph; or (B) a specific reference under section 120, 121, or 365(c) of title 35, United States Code, to any patent or application that contains or contained at any time such a claim.

The opinion admits that this section is "silent" regarding interferences. Biogen relied upon this silence to support its position that pre-AIA provisions of the Patent Act, including the alternative choices for forum of appeals from adverse interference decisions, remain effective for interferences declared after September 15, 2012. The panel disagreed and found that "Congress specifically addressed the manner of judicial review of Board decisions in continuing interference proceedings" and that these provisions control. Specifically, the opinion cites §6(f)(3)(C), which provides:

(C) APPEALS.—The authorization to appeal or have remedy from derivation proceedings in sections 141(d) and 146 of title 35, United States Code, as amended by this Act, and the jurisdiction to entertain appeals from derivation proceedings in section 1295(a)(4)(A) of title 28, United States Code, as amended by this Act, shall be deemed to extend to any final decision in an interference that is commenced before the effective date set forth in paragraph (2)(A) of this subsection [i.e., September 16, 2012] and that is not dismissed pursuant to this paragraph.

The opinion recognized that this section did not address appeals in interferences declared after September 15, 2012 but asserted that Congress "corrected [its] omission" in § 1(k)(3) of the (AIA) Technical Corrections Act:

(3) REVIEW OF INTERFERENCE DECISIONS.—The provisions of sections 6 and 141 of title 35, United States Code, and section 1295(a)(4)(A) of title 28, United States Code, as in effect on September 15, 2012, shall apply to interference proceedings that are declared after September 15, 2012, under section 135 of title 35, United States Code, as in effect before the effective date under section 3(n) of the Leahy-Smith America Invents Act. The Patent Trial and Appeal Board may be deemed to be the Board of Patent Appeals and Interferences for purposes of such interference proceedings.

The Federal Circuit found express provisions regarding appellate review under § 141 for interferences declared after September 16, 2012; the absence of any corresponding provisions for review under § 146 was enough for the Court to conclude that no such provision survived the changes in U.S. patent law wrought by the AIA. Taking this silence in combination with the provisions of § 6(f)(3)(C) of the AIA, the panel concluded that "pre-AIA § 146 review was eliminated for interference proceedings declared after September 15, 2012."

The basis for this conclusion bears some consideration from the Court, which asserted in the opinion that the panel relied on the "basic tenet of statutory interpretation that the specific governs the general." This tenet is illustrated in the opinion by Supreme Court precedent including RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. 2065 (2012), and Gozlon-Peretz v. United States, 498 U.S. 395 (1991). In the instant case, the opinion states that "even if the general effective date provision in § 3(n)(1) suggests that in general Congress preserved pre-AIA provisions for pre-March 16, 2013, patent applications, it does not follow that we should myopically apply § 3(n)(1) independently of the specific provisions in AIA § 6(f)(3)(C) and § 1(k)(3)." The opinion discerns that Congress intended to target "'deliberately targeted specific problems with specific solutions,'" citing RadLAX that the Court "cannot ignore." The panel decided that it "must accordingly follow the express provisions in the statute" (forgetting, it would seem, the lack of clarity the Court noted earlier in its opinion) and characterized Biogen's arguments to the contrary to be "convoluted."

Turning to the merits, the panel agreed with the PTAB that "estoppel by judgment" applies here, defined as situations where "'a losing party in a previous interference between the same parties'" tries to patent a claim 'not patentably distinct from the counts in issue in that [prior] interference,'" citing Woods v. Tsuchiya, 754 F.2d 1571, 1579 (Fed. Cir. 1985). "Claims that are not patentably distinct from lost counts were already adjudicated in the prior interference and are thus conclusive," said the Court and agreed with the Foundation that "Fiers failed to meet his burden to show patentable distinctness to avoid interference estoppel by judgment." The Court also relied upon the Board's reasoning that "'[i]n light of [the fact] that DNA and the known genetic code indicating which DNA sequences encode each amino acid, those of skill in the art would have considered the polypeptide Fiers now claims to have been obvious.'" Included in the litany of failures was Biogen's assertion of a Restriction Requirement in Biogen's application at issue in the interference, with the Court holding that issuing this paper is not determinative of patentable distinctness but as being limited to "evidence that the examiner thought that there were 'two or more independent and distinct inventions' claimed in a single application," citing 35 U.S.C. § 121; 37 C.F.R. § 1.142; MPEP § 802.01. The panel characterized restriction requirements as being "primarily for administrative convenience" and as "not represent[ing] a final determination that the relevant claims are patentably distinct," citing Applied Materials, Inc. v. Advanced Semiconductor Materials Am., Inc., 98 F.3d 1563, 1568 (Fed. Cir. 1996). The panel showed similar disregard for similar arguments regarding the Office declaring separate interferences, also emphasizing the "discretionary" nature of these decisions.

The panel decision cannot properly be contested as being "wrong" per se, but it can be recognized that it is based on the absence of express provisions regarding district court review of interferences declared after September 15, 2012. As such, it should be a simple matter for Congress to restore the status quo ante (the AIA) the next time it considers "technical amendments" to the AIA or other revisions to the Patent Act.